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Why Is SurModics (SRDX) Down 7.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for SurModics (SRDX - Free Report) . Shares have lost about 7.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is SurModics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Surmodics Q3 Earnings and Revenues Beat Estimates

Surmodics, Inc. reported adjusted earnings per share of 21 cents in third-quarter fiscal 2020, which beat the Zacks Consensus Estimate of 10 cents. Also, the bottom line rose 40% from the year-ago quarter.

On a GAAP (reported) basis, earnings came in at 18 cents, up 63.6% from the prior-year quarter.

Revenues in the quarter improved 10% year over year to $26.9 million. Also, the figure beat the Zacks Consensus Estimate of $25 million by 8.4%.

Fiscal Q3 Highlights

In the quarter under review, Product sales were $11.9 million, up 20.2% from the prior-year quarter. Royalty and license fee revenues totaled $12.4million, up 6.7% from the prior-year quarter. Research, development and other revenues were $2.5 million, down 13.8% year over year.

Segmental Analysis

Medical Device

In the reported quarter, sales at the segment rose to $20.5 million (comprising 76.3% of total revenues), up 8% from the year-ago quarter.

In Vitro Diagnostics

In the quarter under review, sales improved 18% to $6.4 million (23.7% of total revenues).

Operational Details

Gross profit for the quarter came in at 22.4 million, up 6.9% year over year. Gross margin was 83.5%, down 271 basis points (bps).

The company reported adjusted operating profit of $ 1.7 million, which fell 1.2% from the year-ago quarter. Adjusted operating margin was 6.3%, showing a contraction of 74 bps.

Fiscal 2020 Guidance

Due to the continued uncertainty surrounding the duration and extent of the COVID-19 pandemic, Surmodics will not issue any financial guidance for fiscal 2020.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, SurModics has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.


SurModics has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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