Over the past six months, ICU Medical’s shares (currently trading at $140.27) have posted a disappointing 17.9% loss while the S&P 500 was down 2.9%. This may have investors wondering how to approach the situation.

Is now the time to buy ICU Medical, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free .

Why Is ICU Medical Not Exciting?

Even with the cheaper entry price, we're swiping left on ICU Medical for now. Here are three reasons why we avoid ICUI and a stock we'd rather own.

1. Lackluster Revenue Growth

Long-term growth is the most important, but within healthcare, a stretched historical view may miss new innovations or demand cycles. ICU Medical’s recent performance shows its demand has slowed as its annualized revenue growth of 2% over the last two years was below its five-year trend.

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect ICU Medical’s revenue to drop by 1.4%, a decrease from its 2% annualized growth for the past two years. This projection is underwhelming and suggests its products and services will see some demand headwinds.

3. EPS Trending Down

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Sadly for ICU Medical, its EPS declined by 4.1% annually over the last five years while its revenue grew by 14.4%. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

ICU Medical isn’t a terrible business, but it doesn’t pass our quality test. After the recent drawdown, the stock trades at 19.6× forward price-to-earnings (or $140.27 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. Let us point you toward one of our top digital advertising picks .

Stocks We Would Buy Instead of ICU Medical

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