It has been about a month since the last earnings report for Penumbra (PEN Quick QuotePEN - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Penumbra 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 drivers.

Penumbra Q2 Earnings Beat, Sales Growth Robust

Penumbra reported second-quarter 2023 adjusted earnings per share of 43 cents, which beat the Zacks Consensus Estimate of 28 cents by a huge 53.6%. The company had recorded an adjusted income of 1 cent per share in the year-ago period.

GAAP earnings per share was 48 cents against a loss per share of 10 cents in the prior-year quarter.

Revenues in Detail

Penumbra registered revenues of $261.5 million in the reported quarter, up 25.5% year over year on a reported basis as well as at constant exchange rate or CER. The figure also surpassed the Zacks Consensus Estimate by 3.3%.

Quarter in Details

The company reports under two geographical segments — United States and International — as well as under two product categories — Vascular and Neuro.

PEN recorded revenues of $186.7 million (71% of total revenues) in the United States, up 32% reportedly as well as at CER year over year.

Sales improved 11.7% to $74.7 million in the International segment. Excluding foreign currency impact, the unit’s sales were up 11.6% year over year.

The company registered revenues of $152.7 million from sales of vascular products, up 23.6% reportedly and 23.7% at CER from the prior-year level. There was 50% year-over-year growth in U.S. thrombectomy. The international Vascular business witnessed relatively flat year-over-year sales.

Sales of neuro products totaled $108.8 million, up 28.3% reportedly and 28.1% at CER. This business reported strong contribution from new products in the United States, Europe and Asia Pacific.

Margin Trend

In the reported quarter, Penumbra’s gross profit improved 24.5% to $166.9 million. However, gross margin contracted 52 basis points to 63.8% on a 27.4% rise incost of revenues.

Selling, general and administrative expenses rose 11.2% to $127.4 million. Research and development expenses totaled $21.5 million, up 10.1% year over year. Total operating expenses came in at $148.9 million, up 11% from that recorded in the prior-year quarter.

Adjusted operating income amounted to $17.9 million against the prior-year quarter’s reported loss of $0.1 million.

Financial Update

Penumbra exited second-quarter 2023 with cash and cash equivalents and marketable investments of $114.2 million compared with the first-quarter record of $199.1 million.

2023 Sales Guidance Raised

Penumbra issued updated guidance for 2023 revenues. The company expects net sales in the range of $1.05-$1.07 billion, implying a 24-26% improvement year over year. Previously, PEN anticipated sales to be in the band of $1.04-$1.06 billion in 2023. It expects the vascular business to grow slightly above the 24-26% range and the neuro business to remain below this guidance.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, Penumbra has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Penumbra has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Penumbra belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Hologic (HOLX Quick QuoteHOLX - Free Report) , has gained 0.9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.

Hologic reported revenues of $984.4 million in the last reported quarter, representing a year-over-year change of -1.8%. EPS of $0.93 for the same period compares with $0.95 a year ago.

Hologic is expected to post earnings of $0.85 per share for the current quarter, representing a year-over-year change of +3.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.9%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hologic. Also, the stock has a VGM Score of C.