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Abiomed (ABMD - Analyst Report) delivered positive earnings surprises in three of the last four quarters, and is scheduled to deliver fiscal first quarter results on August 2. Earnings estimates for this heart care device provider have been trending higher, which made it a Zacks #1 Rank (Strong Buy) stock on July 19, 2012.
Turnaround Fourth Quarter
On May 16, 2012, Abiomed reported adjusted earnings per share for its fiscal fourth quarter of 7 cents, beating the Zacks Consensus Estimate by 16.7%. This also compared favorably with the year-ago loss of 4 cents. Net income increased to $2.6 million from a loss of $1.8 million in the year-ago quarter.
Gross margin improved to 81.8% from 79.5% a year ago. Income from operations was $2.9 million, up from a loss of $1.4 million.
Revenues soared 31% year over year to $37.3 million (a quarterly record), beating the Zacks Consensus Estimate by 6.2%. The growth in the top-line reflects solid sales of Impella heart pumps.
Globally, Impella sales rose 43% year over year to $32.3 million in the fourth quarter. U.S. Impella sales spiked 44% to $29.9 million. Abiomed opened 26 new U.S. Impella 2.5 sites to end the quarter with a total of 631 customer sites.
For fiscal 2013, Abiomed forecasts revenues to grow between 20% and 24% to a range of $152 million to $157 million. Worldwide, Impella sales are expected to rise roughly 30%.
In March 2012, the company made a number of presentations on the Impella device at the American College of Cardiology Scientific Sessions. One of the presentations included the first human use of the Impella RP heart pump outside the U.S. for treating right-sided heart failure.
Moreover, Abiomed announced the first successful human use of its new percutaneous Impella cVAD heart pump outside the U.S. The device can pump up to 4 liters of blood in one minute. The Impella cVAD is not commercially available in the U.S. The company expects to receive 510(k) approval for the product by the second half of fiscal 2013.
Earnings Estimates on the Rise
The Zacks Consensus Estimate for fiscal 2013 has risen 10% in the last three months to 22 cents per share. For fiscal 2014, the Zacks Consensus Estimate moved up 2.4% in the last 30 days to 43 cents, reflecting an implied growth of 91.1%.
Abiomed trades at a premium to its peers by most metrics, such as price-to-earnings (P/E) and price-to-sales (P/S). The stock is currently trading at a forward P/E of 105.9x, a 221.3% premium to the peer group average of 32.9x. Similarly, on a price-to-sales basis, the stock is trading at 7.4x, 121.9% higher than its peer group average of 3.3x.
Chart Shows Strength
Abiomeds price performance has been reasonably strong with the chart showing an upward trend despite periodic pullbacks. Earnings estimates have guided the stock to rally higher, something that aggressive growth investors should find attractive.
On the whole, a series of earnings beats, rising estimates and upbeat growth prospects make Abiomed worth considering. The one-year return for the stock is 44.7% compared with 4.6% from the S&P 500 index.
Based in Danvers, Massachusetts and founded in 1981, Abiomed is dedicated to creating fresh know-how that aid or replace a faltering human heart. Its Impella product is the smallest heart pump.
The Impella 5.0 catheter and Impella LD are minute heart pumps with composite motor for usage primarily in heart surgery. These devices are intended to aid individuals who need greater circulatory assistance than that provided by Impella 2.5. The Impella 5.0 and Impella LD devices were granted 510(k) clearance by the Food and Drug Administration (FDA) in April 2009, for circulatory assistance for up to six hours. These devices have also received CE Mark approval in Europe and are authorized for usage in more than 40 nations.