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Reasons to Retain ShockWave Medical (SWAV) in Your Portfolio

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ShockWave Medical, Inc. (SWAV - Free Report) is well poised for growth, backed by its research and development (R&D) efforts and focus on clinical studies.

Shares of this Zacks Rank #3 (Hold) company have risen 31.5% compared with the industry’s 7% growth so far this year. The S&P 500 Index has increased 16.9% in the same time frame.

With a market capitalization of $10.08 billion, this medical device company is committed to developing and commercializing products that can change the way calcified cardiovascular disease is treated.

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ShockWave Medical’s earnings yield of 1.4% compares favorably with the industry’s (6.3%). Its earnings beat estimates in each of the trailing four quarters, the average surprise being 98.84%.

What’s Driving the Company’s Performance?

SWAV invests in R&D efforts to accelerate its Intravascular Lithotripsy (IVL)Technology, thereby broadening and enhancing its existing product offerings. In the first quarter of 2023, the company incurred R&D expenses of $27 million, up 58.5% from the prior-year quarter’s level.

For 2023, the company expects revenues in the $700-$720 million range, implying growth of 43-47% from the previous year’s number.

ShockWave Medical believes in its ability to rapidly develop innovative products, owing to a dynamic product innovation process. The versatility and leveraging ability of its core technology and management philosophy continue to improve its R&D process.

The company recruits and retains engineers and scientists with substantial expertise in developing medical devices. Its pipeline of products in various stages of development is anticipated to provide additional commercial opportunities.

Since its inception, ShockWave Medical has been committed to generating clinical data to substantiate the safety and effectiveness of its IVL Technology. The initial studies consistently highlighted low rates of complications irrespective of the type of vessel being examined.

Apart from getting regulatory approvals or clearances, data from the company’s clinical studies strengthen its ability to drive the adoption of IVL Technology throughout multiple therapies in its existing and new market segments.

SWAV’s previous studies guided optimal IVL procedure technique and enriched the design of its IVL System and products under development. Management is optimistic about the continued clinical acceptance and penetration of IVL, as demonstrated by its strong results in first-quarter 2023 and a higher outlook for 2023 revenues.

The company has ongoing clinical programs for several products and indications. On being successful, these will enable SWAV to expand the commercialization of its products into new geographies and indications.

Shockwave Medical received regulatory approval for the Shockwave C2 Coronary IVL Catheter in Japan in 2022. Besides, the company also announced the introduction and global availability of its M5+ peripheral IVL catheter, post the receipt of the CE mark and the FDA clearance last year.

What’s the Downside?

Limited commercialization expertise and approved or cleared products pose a challenge in evaluating SWAV’s current business and determining future financial growth.

Estimate Trend

The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $715.82 million, indicating an improvement of 46.2% from the previous year’s reported figure. The same for adjusted earnings per share is pinned at $3.97.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Alcon (ALC - Free Report) , DexCom (DXCM - Free Report) and Hologic (HOLX - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alcon has an estimated long-term growth rate of 14.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 8.85%.

ALC’s shares haverallied 18.3% year to date compared with the industry’s 8.8% growth.

DexCom has an estimated long-term growth rate of 40.4%. Its earnings surpassed estimates in three of the trailing four quarters and met the same once, delivering an average surprise of 15.19%.

DXCM’s shares have risen 12.8% year to date compared with the industry’s 8.8% growth.

Hologic has an estimated earnings growth rate of 4.1% for fiscal 2024. HOLX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 27.32%.

HOLX’s shares have gained 6.8% year to date compared with the industry’s 8.8% growth.

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