Why Integer Stock Leaped More Than 5% Higher Today

Investors were eager to own shares of medical device company Integer Holdings (NYSE: ITGR) on Wednesday. This was due largely to an analyst's recommendation upgrade; that pundit now believes the company's equity is a buy.

It's now a buy, says pundit

That prognosticator was Oppenheimer's Suraj Kalia, who upped his recommendation on Integer to outperform (read: buy) from the previous perform (hold). In doing so, Kalia set a price target of $115 per share.

Kalia's move was based largely on Integer's recent announcement that it is conducting a "strategic review" of its business, according to reports. Such a term indicates that it is considering selling itself to an outside party, ideally for a premium to its current price.

Integer functions as a contract development and manufacturing organization (CDMO) for business outsourcing the production of medical devices. In the analyst's view, this, along with its modest valuations and share price, makes it an attractive target for private equity firms -- according to Kalia's research, several are interested in the medical device CDMO business.

This sleeper might awaken

Integer operates in a limited but profitable niche, and it tends to post top-line growth and high net margins. It's a somewhat under-the-radar healthcare stock that qualifies as a sleeper play these days. That might not last, however, if potential investors start showing notable interest.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.