Back to top

Analyst Blog

Consistent uptrend in the core epilepsy business, pipeline development, strategic investments and impressive third-quarter performance has helped Cyberonics to become a global leader in the neuromodulation space. Recently, in the Barclay’s global healthcare conference, the company disclosed plans on its key areas of development.

The company encouragingly noted that the market for epilepsy is huge and still to a great extent underpenetrated in the U.S. The recent data shows that nearly 2.7 million people in the U.S. are suffering from epilepsy leading to around 4 lac potential patients (with drug-resistant epilepsy) for Cyberonics.

Moreover, data shows that each year a minimum of 1.25 lac epilepsy patients are detected, leading to 15,000–24,000 new patients for the company. Cyberonics believes that this rapidly growing market has huge potential to maintain its growth trajectory.

In addition, the company’s international operation is quite attractive.Currently, Cyberonics has international sales in 70 countries and has already made implants in 68,000 patients over the years. In the last reported quarter, international sales, representing 19% of the company’s revenues, grew a robust 37% (on a reported as well as CER basis to a record high of $12 million) with unit growth of 36%. Growth in the overseas market was led by double-digit European unit sale growth for the 7th successive quarter.

Currently, Cyberonics is working hard for market development. At present, it is emphasizing on domestic market development through investment as well as working on increasing international penetration.

Moreover, Cyberonics is focusing on strengthening its pipeline, which seems to be on the right track with the company’s AspireHC and AspireSR product line. Furthermore, the generation 3 of the Pulse product, generation 4 of the Demipulse product and generation 5 of the AspireHC products are expected to boost the top line in the coming quarters.

With rising uptake of its VNS therapy across the globe, Cyberonics increased its guidance for the ongoing fiscal, reflecting the potential to drive growth. Although we remain apprehensive about the tough macroeconomic scenario and competitive pressures from Medtronic and St. Jude in the neuromodulation space, considering the advantages of VNS therapy and the strong untapped potential of the epilepsy market, we are optimistic about the growth prospects of the company.

The stock currently holds a Zacks Rank #1 (Strong Buy). Apart from Cyberonics, Given Imaging with a similar Zacks Rank is expected to do well in the medical sector.

Please login to Zacks.com or register to post a comment.