Getinge – time to profit

On 12 January 2015, GETIB announced that the current CEO, Johann Malmquist, had informed the Board that he would like to resign from his current assignment. As a result the Board had decided to appoint Alex Myers as the new President and CEO of the Getinge Group, effective 25 March 2015. Mr Myers is currently President and CEO of Hilding Anders, a global leader within the bedding industry with a turnover of SEK9bn and 8,000 employees. Mr Myers has previous experience with GETIB, having been the Executive VP for the Extended Care business during 2009-2013.

Under the leadership of Johan Malmquist, GETIB has undergone a successful growth phase over the past 18 years, turning the company into a major supplier of medical capital equipment and consumables. However the last 2-3 years have been more challenging, with several earnings disappointments and more recently a material FDA uncertainty within its Medical Systems division. Investor feedback over the past 6-12 months made it increasingly clear, that these disappointments have resulted in a major stock overhang, with reduced investor interest in GETIB. The announcement yeasterday resulted  in further price weakness.

Morgan Stanley research, parts of which are quoted here, claims that they had discussion with GETIB post the press release, that did not suggest that business has become incrementally more challenging or that the FDA negotiations around its Medical Systems division have become more problematic. Johan Malmquist was quoted in the press that he expects resolution of the FDA investigation by late January / early February. If so, than the current price weakness caused by Malmquist resignation is a good time to buy.

See below my detailed analysis why Getinge is a good opportunity at current price levels

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