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3 Reasons to Retain Avanos (AVNS) Stock in Your Portfolio
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Avanos Medical, Inc. (AVNS - Free Report) is well poised for growth in the coming quarters, backed by its impressive product line. A solid third-quarter 2022 performance, along with a continued focus on its Research and Development (R&D), is expected to contribute further. However, stiff competition and uncertainty in the healthcare industry persist.
So far this year, this Zacks Rank #3 (Hold) stock has lost 25.1% compared with a 27.9% decline of the industry and an 18.5% decline of the S&P 500 composite.
The renowned medical device solutions provider has a market capitalization of $1.22 billion. The company projects 10.1% growth for 2023 and expects to maintain its strong performance. Avanos’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 8.51%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Product Portfolio: Avanos’ robust product suite raises our optimism. On its third-quarter 2022 earnings call, Avanos confirmed that it continued to see strong growth in its Digestive Health business, with third-quarter growth being 14% in constant currency. Digestive Health portfolio’s NeoMed grew 39% from the continuation of conversions to Avanos’ ENFit technology amid improving supply. Avanos also confirmed that its pain management arm witnessed growth of nearly 29% compared with the prior-year period.
Focus on R&D: We are upbeat about Avanos’ continued focus on its R&D wing to commercialize new products, and enhance the effectiveness, reliability and safety of existing ones. The company has been investing to expand the indications for the use of its pain products with clinical research and studies, as well as associated new product developments. It is also expanding its portfolio with customer-preferred product enhancements.
Avanos’ buyout of NeoMed, Inc. was a significant addition to its Digestive Health products portfolio. Avanos’ acquisition of OrthogenRx (in January) is expected to enhance its chronic pain portfolio.
Strong Q3 Results: Avanos’ robust third-quarter 2022 results buoy optimism. The company saw year-over-year improvement in the overall top and bottom lines. The strength exhibited by Avanos’ core Pain Management segment, along with low single-digit growth in Interventional Pain solutions, is encouraging. The continued strong demand for Digestive Health products and robust sales of NeoMed are promising. The expansion of both margins bodes well.
Downsides
Uncertainty in Healthcare Industry: Various government authorities periodically review and assess alternative healthcare delivery systems and payment methods. Avanos cannot predict with certainty what healthcare initiatives, if any, will be implemented by the governments or what ultimate effect healthcare reform or any future legislation or regulation may have on the company’s customers’ purchasing decisions regarding its products. However, the implementation of new legislation and regulation may lower reimbursements for Avanos’ products, reduce medical procedure volumes and affect its business.
Competition: Avanos faces significant competition in both the United States and international markets. Competitors of its products are fragmented by particular product categories and the individual markets for these products are also highly competitive. Such an intensely competitive landscape is likely to put pressure on margins.
Avanos is witnessing a positive estimate revision trend for 2022. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved 1.3% north to $1.53.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $201.6 million, suggesting a 2.2% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space areAMN Healthcare Services, Inc. (AMN - Free Report) , ShockWave Medical, Inc. (SWAV - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 11%.
AMN Healthcarehas lost 3.8% compared with the industry’s 30% decline so far this year.
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 21.2% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.
ShockWave Medical has gained 30.5% against the industry’s 26.9% decline so far this year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.
McKesson has gained 52.1% against the industry’s 12.8% decline so far this year.
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3 Reasons to Retain Avanos (AVNS) Stock in Your Portfolio
Avanos Medical, Inc. (AVNS - Free Report) is well poised for growth in the coming quarters, backed by its impressive product line. A solid third-quarter 2022 performance, along with a continued focus on its Research and Development (R&D), is expected to contribute further. However, stiff competition and uncertainty in the healthcare industry persist.
So far this year, this Zacks Rank #3 (Hold) stock has lost 25.1% compared with a 27.9% decline of the industry and an 18.5% decline of the S&P 500 composite.
The renowned medical device solutions provider has a market capitalization of $1.22 billion. The company projects 10.1% growth for 2023 and expects to maintain its strong performance. Avanos’ earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 8.51%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Product Portfolio: Avanos’ robust product suite raises our optimism. On its third-quarter 2022 earnings call, Avanos confirmed that it continued to see strong growth in its Digestive Health business, with third-quarter growth being 14% in constant currency. Digestive Health portfolio’s NeoMed grew 39% from the continuation of conversions to Avanos’ ENFit technology amid improving supply. Avanos also confirmed that its pain management arm witnessed growth of nearly 29% compared with the prior-year period.
Focus on R&D: We are upbeat about Avanos’ continued focus on its R&D wing to commercialize new products, and enhance the effectiveness, reliability and safety of existing ones. The company has been investing to expand the indications for the use of its pain products with clinical research and studies, as well as associated new product developments. It is also expanding its portfolio with customer-preferred product enhancements.
Avanos’ buyout of NeoMed, Inc. was a significant addition to its Digestive Health products portfolio. Avanos’ acquisition of OrthogenRx (in January) is expected to enhance its chronic pain portfolio.
Strong Q3 Results: Avanos’ robust third-quarter 2022 results buoy optimism. The company saw year-over-year improvement in the overall top and bottom lines. The strength exhibited by Avanos’ core Pain Management segment, along with low single-digit growth in Interventional Pain solutions, is encouraging. The continued strong demand for Digestive Health products and robust sales of NeoMed are promising. The expansion of both margins bodes well.
Downsides
Uncertainty in Healthcare Industry: Various government authorities periodically review and assess alternative healthcare delivery systems and payment methods. Avanos cannot predict with certainty what healthcare initiatives, if any, will be implemented by the governments or what ultimate effect healthcare reform or any future legislation or regulation may have on the company’s customers’ purchasing decisions regarding its products. However, the implementation of new legislation and regulation may lower reimbursements for Avanos’ products, reduce medical procedure volumes and affect its business.
Competition: Avanos faces significant competition in both the United States and international markets. Competitors of its products are fragmented by particular product categories and the individual markets for these products are also highly competitive. Such an intensely competitive landscape is likely to put pressure on margins.
AVANOS MEDICAL, INC. Price
AVANOS MEDICAL, INC. price | AVANOS MEDICAL, INC. Quote
Estimate Trend
Avanos is witnessing a positive estimate revision trend for 2022. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved 1.3% north to $1.53.
The Zacks Consensus Estimate for the company’s fourth-quarter 2022 revenues is pegged at $201.6 million, suggesting a 2.2% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space areAMN Healthcare Services, Inc. (AMN - Free Report) , ShockWave Medical, Inc. (SWAV - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 11%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcarehas lost 3.8% compared with the industry’s 30% decline so far this year.
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 21.2% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.
ShockWave Medical has gained 30.5% against the industry’s 26.9% decline so far this year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.
McKesson has gained 52.1% against the industry’s 12.8% decline so far this year.