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Penumbra (PEN) Rides on New Product Offerings as FX Woe Ails
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Penumbra (PEN - Free Report) is gaining traction in the markets on strong customer uptake of advanced products. Yet, unfavorable currency movement and rising expenses are major dampeners for Penumbra. The stock carries a Zacks Rank #3 (Hold).
Penumbra is still in the early stages of its journey to bring the company’s proprietary thrombectomy technologies to patients in the United States and around internationally. The company’s consistent revenue growth momentum is being driven by the extraordinary outcomes in patients treated with Lightning Flash, Lightning Bolt 7 and RED 72 with SENDit technology.
According to the company, Lightning Flash's transformative power, speed, safety, and efficacy profile is the biggest driver of the exceptional early adoption of the product. Penumbra also saw an acceleration of Lightning Bolt 7 cases in the last two months of the second quarter as conversion from surgery, lytics and other mechanical thrombectomy products gained momentum. At the end of the second quarter, Penumbra had more than 1,000 active submissions in hospitals for approval of either Lightning Flash or Lightning Bolt 7.
Within the Neuro franchise, Penumbra is witnessing an acceleration in the company’s stroke business. Further, it is experiencing strong customer uptake of RED 72 (with the proprietary SENDit technology), RED 43 and BMX81. These products represent meaningful advances in both the trackability of 0.072-sized aspiration catheters as well as distal clot removal. According to Penumbra, coupled with the recently launched BMX81, these products will continue to increase the company’s growth and market share in Neuro, particularly as physicians realize the trade-off with oversized aspiration catheters in the market in the past several years.
Image Source: Zacks Investment Research
In the second quarter, a strong increase in the company’s Neuro product sales was driven by an increase in sales of neuro thrombectomy products and neuro access products, which globally increased 32.4% and 27.6%, respectively.
Shares of Penumbra have surged 15.8% over the past year against the industry’s 3.9% decline.
On the flip side, while the acute phase of the pandemic has subsided, the pandemic and the response have widespread impact on global supply chains and labor markets. These have resulted in cost inflation and raw material supply constraints, as well as an increase in employee turnover rates in certain jurisdictions. All these factors are putting significant pressure on Penumbra’s profitability.
In the second quarter of 2023, Penumbra’s gross margin contracted 52 basis points to 63.8% on a 27.4% rise in cost of revenues. Selling, general and administrative expenses rose 11.2%. Research and development expenses were up 10.1% year over year. Total operating expenses were up 11% from the prior year quarter.
A significant portion of Penumbra’s sales and costs are exposed to changes in foreign exchange rates. In 2022, approximately 30.2% of the company's consolidated revenues came from the non-U.S. markets. The company’s operations use multiple foreign currencies, including the euro and Japanese yen. Changes in those currencies relative to the U.S. dollar will impact its sales, cost of sales and expenses, and consequently, net income.
Haemonetics stock has risen 13.4% in the past year. Earnings estimates for Haemonetics have remained constant at $3.82 for 2023 and at $4.07 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Quanterix’s 2023 loss per share have remained constant at 97 cents in the past 30 days. Shares of the company have surged 141.5% in the past year against the industry’s fall of 5.6%.
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for Align Technology’s 2023 earnings have moved up from $8.77 to $8.78 per share in the past 30 days. Shares of the company have increased 27% in the past year compared with the industry’s rise of 14.3%.
ALGN’s earnings beat estimates in three of the trailing four quarters and missed the same in one. In the last reported quarter, it posted an earnings surprise of 9.90%.
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Penumbra (PEN) Rides on New Product Offerings as FX Woe Ails
Penumbra (PEN - Free Report) is gaining traction in the markets on strong customer uptake of advanced products. Yet, unfavorable currency movement and rising expenses are major dampeners for Penumbra. The stock carries a Zacks Rank #3 (Hold).
Penumbra is still in the early stages of its journey to bring the company’s proprietary thrombectomy technologies to patients in the United States and around internationally. The company’s consistent revenue growth momentum is being driven by the extraordinary outcomes in patients treated with Lightning Flash, Lightning Bolt 7 and RED 72 with SENDit technology.
According to the company, Lightning Flash's transformative power, speed, safety, and efficacy profile is the biggest driver of the exceptional early adoption of the product. Penumbra also saw an acceleration of Lightning Bolt 7 cases in the last two months of the second quarter as conversion from surgery, lytics and other mechanical thrombectomy products gained momentum. At the end of the second quarter, Penumbra had more than 1,000 active submissions in hospitals for approval of either Lightning Flash or Lightning Bolt 7.
Within the Neuro franchise, Penumbra is witnessing an acceleration in the company’s stroke business. Further, it is experiencing strong customer uptake of RED 72 (with the proprietary SENDit technology), RED 43 and BMX81. These products represent meaningful advances in both the trackability of 0.072-sized aspiration catheters as well as distal clot removal. According to Penumbra, coupled with the recently launched BMX81, these products will continue to increase the company’s growth and market share in Neuro, particularly as physicians realize the trade-off with oversized aspiration catheters in the market in the past several years.
Image Source: Zacks Investment Research
In the second quarter, a strong increase in the company’s Neuro product sales was driven by an increase in sales of neuro thrombectomy products and neuro access products, which globally increased 32.4% and 27.6%, respectively.
Shares of Penumbra have surged 15.8% over the past year against the industry’s 3.9% decline.
On the flip side, while the acute phase of the pandemic has subsided, the pandemic and the response have widespread impact on global supply chains and labor markets. These have resulted in cost inflation and raw material supply constraints, as well as an increase in employee turnover rates in certain jurisdictions. All these factors are putting significant pressure on Penumbra’s profitability.
In the second quarter of 2023, Penumbra’s gross margin contracted 52 basis points to 63.8% on a 27.4% rise in cost of revenues. Selling, general and administrative expenses rose 11.2%. Research and development expenses were up 10.1% year over year. Total operating expenses were up 11% from the prior year quarter.
A significant portion of Penumbra’s sales and costs are exposed to changes in foreign exchange rates. In 2022, approximately 30.2% of the company's consolidated revenues came from the non-U.S. markets. The company’s operations use multiple foreign currencies, including the euro and Japanese yen. Changes in those currencies relative to the U.S. dollar will impact its sales, cost of sales and expenses, and consequently, net income.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Quanterix (QTRX - Free Report) and Align Technology (ALGN - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics stock has risen 13.4% in the past year. Earnings estimates for Haemonetics have remained constant at $3.82 for 2023 and at $4.07 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Quanterix’s 2023 loss per share have remained constant at 97 cents in the past 30 days. Shares of the company have surged 141.5% in the past year against the industry’s fall of 5.6%.
QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.
Estimates for Align Technology’s 2023 earnings have moved up from $8.77 to $8.78 per share in the past 30 days. Shares of the company have increased 27% in the past year compared with the industry’s rise of 14.3%.
ALGN’s earnings beat estimates in three of the trailing four quarters and missed the same in one. In the last reported quarter, it posted an earnings surprise of 9.90%.