Jim Cramer Says Medline IPO “Went so Well” That it Looks “A Little Too Expensive”

Medline Inc. (NASDAQ:MDLN) is one of the stocks Jim Cramer shed light on. Cramer discussed the company’s IPO during the episode, as he remarked:

“So is Medline worth buying after today’s IPO and the stock’s subsequent rally? This was a very successful deal with the stock up more than 41% today. Initially, Medline was only looking to sell 179 million shares for $26 to $30, but the demand was so high that they sold over 216 million shares at $29. Today, Medline opened for trading at $35, up over 20% from the offer price, and then it added a few more bucks after that. At the current price, Medline has a market capitalization of roughly $54 billion, making this a nice win for the PE firms…

But I do think that the stock looks a little richer, and I’m reluctant to recommend it after this strong opening. We know from the IPO perspectives that Medline earned 68 cents per share through the first three quarters of the year and annualize that, and you get to 91 cents of earnings per share. Given the current share price, the stock trades at something like 45 times my back-of-the-envelope earnings estimates. That’s a lot for a company with low double-digit revenue growth. I’m uncomfortable with that. Another way to approach Medline’s valuation is with an enterprise multiple…. Medline’s enterprise value is about 70 billion, and it’s annualizing its EBITDA from the first nine months of 2025.

We get 3.55 billion for the full year… meaning the enterprise multiple is something like 20. The tough thing here is that we don’t have a lot of great comparisons for Medline, which is part medical supplies company, part distributor. The company’s prime vendor model means that much of its revenue is recurring in nature. We like recurring revenue even if it’s not actually recurring revenue…

Looking at the rest of the cohort, I’d be willing to give Medline an enterprise multiple of about 15. That translates to $29. That’s exactly where the stock came public. Might be worth more than that, but I don’t want to chase it after this huge first-day move. That’s been a sucker’s play. So here’s the bottom line: We had the largest IPO in over four years today, and it generally went pretty darn well. In fact, it went so well that Medline looks a little too expensive for me. Even though I like the company and I really do, I wouldn’t buy the stock up here. I’d say wait for a pullback, maybe down to $29 or $30, before you pull the trigger. And if that doesn’t happen, you know what you have to do? You just gotta say you missed it.”

Photo by Yiorgos Ntrahas on Unsplash

Medline Inc. (NASDAQ:MDLN) supplies medical and surgical products for hospitals, surgery centers, and other healthcare facilities.

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Disclosure: None. This article is originally published at Insider Monkey.