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Thoratec (THOR) analysts keep raising their estimates, with the latest move coming on an earnings surprise. The company has an excellent earnings track record and could further benefit from a competitor's setback.

The growth rates for this Zacks #1 Rank (Strong Buy) are looking good and getting better.

Company Description

Thoratec Corp. provides cardiac support devices for use by patients with acute or chronic heart failure. Some of the products will pump blood through the heart for prolonged periods of time in the event of cardiac arrest.

Solid Quarterly Results

On May 3 Thoratec reported its first-quarter results that were better than analysts expected. Earnings per share came in $0.31, 2 cents higher than the Zacks Consensus Estimate. The company had topped estimates 10 quarters in a row before it missed 2 periods ago. Revenues saw a small uptick, to $99.5 million.

During the quarter Thoratec spend $50 million to buy back 1.8 million shares of common stock. The company also saw margins expand thanks to a favorable product mix and lower inventory reserves.

Forecast Improving

After the company offered guidance for the rest of the year analysts raised their estimates. The full-year consensus estimate is up 3 cents for this year, to $1.26. Next year's rose 10 cents, to $1.47.

In 2010 Thoratec earned $1.12, which puts the expected growth rates at 135 and 16%, respectively. The 3-5 year projection is calling for just over 23% per year.

Their Loss, Our Gain

In mid April HeartWare (HTWR) revealed data that showed patients using its device similar to Thoratec's HeartMate II were 3 times more likely to develop blood clots than with the HeartMate.

This probably won't kill the product, but it could significantly add to the time line for approval and give Thoratec more time to get established, building market share.

You can see the stock jumped on the news and the momentum continued on the earnings surprise.

Thoratec - ticker THOR>


Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the Zacks Small Cap Trader service

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