On Aug 7, 2013, Zacks Investment Research upgraded Cyberonics Inc. – a medical technology company with core expertise in neuromodulation – to a Zacks Rank #1 (Strong Buy). The upgrade came on the back of Cyberonics’ consistent better-than-expected quarterly results in the recent past.
Why the Upgrade?
Cyberonics witnessed rising earnings estimates on the back of excellent fourth-quarter fiscal 2013 results. This Houston, Texas-based company delivered positive earnings surprises in all of the last four quarters with an average beat of 12.26%. The long-term expected earnings growth rate for this stock also stands at an impressive 17.5%.
Over the last few quarters, Cyberonics has performed consistently and has exceeded the Zacks Consensus Estimate. The company continues to witness soaring demand for its VNS Therapy for the treatment of refractory epilepsy. The second successive fiscal year of solid overseas growth, amid several macroeconomic uncertainties in the European market, was encouraging. With rising uptake of its VNS therapy across the globe, Cyberonics increased its guidance for the ongoing fiscal.
The market for epilepsy is huge and still to a great extent underpenetrated in the U.S. 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.
As a result of these bullish factors, the tendency for an upward estimate revision has been obvious in recent times. The Zacks Consensus Estimate for 2013 has increased by 3.1% to $1.99 per share, as all the estimates were revised higher over the last 90 days.
Stocks to Consider
Other Medical Devices companies that are expected to significantly outperform over the near term are Affymetrix Inc. , Hanger, Inc. and Align Technology Inc. (ALGN - Analyst Report) . All three stocks carry a Zacks Rank #1 (Strong Buy).