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Here's Why You Should Retain Penumbra (PEN) Stock for Now
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Penumbra, Inc. (PEN - Free Report) is likely to grow in the coming quarters, backed by its robust portfolio expansion efforts. The strength exhibited in the Neuro franchise is highly optimistic for the company’s operations. A strong solvent balance sheet is an added plus. However, the impact of macroeconomic concerns and intense competition are concerning for Penumbra.
In the past year, this Zacks Rank #3 (Hold) stock has risen 4.8% compared with the industry’s 9.3% rise and the S&P 500’s 25.5% rise.
The global healthcare provider company has a market capitalization of $10.44 billion. PEN surpassed earnings estimates in each of the trailing four quarters, the average surprise being 55.6%.
Key Growth Catalysts
Strong Portfolio Expansion: The company’s consistent revenue growth momentum is being driven by extraordinary outcomes in patients treated with Lightning Flash, Lightning Bolt 7 and RED 72 with SENDit technology. Lightning Flash's transformative power, speed, safety and efficacy profile has been the biggest driver of the exceptional early adoption of the product. Penumbra is seeing an acceleration of Lightning Bolt 7 cases in the past few months of 2023 as conversion from surgery, lytics and other mechanical thrombectomy products are gaining momentum.
Image Source: Zacks Investment Research
The company has a robust pipeline, which it expects to launch over the next 18 months. This includes four new computer-assisted vacuum thrombectomy products in the United States. Combined with Flash and Bolt 7, Penumbra expects its CAVT portfolio to drive both market share and market growth in deep vein thrombosis, pulmonary embolism and arterial.
Improving Neuro Trend: 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. These products will continue to increase the company’s growth and market share in Neuro, particularly as physicians continue to realize the trade-off with oversized aspiration catheters in the market in the past several years.
Stable Solvency Structure: Penumbra exited the third quarter of 2023 with cash and cash equivalents of $249 million and a total debt of $24 million. The company did not have any short-term payable debt on its balance sheet. Total debt-to-capital of 2.1% is sequentially lower than 2.2% at the end of the second quarter.
Downsides
Macroeconomic Concerns: While the acute phase of the pandemic has subsided, the pandemic and the response have a 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 third quarter of 2023, the company’s total operating expenses were up 13.1% from that recorded in the prior-year quarter.
Tough Competitive Landscape: The medical device industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants. Penumbra competes with a number of manufacturers and distributors of neuro and vascular medical devices. The company’s most notable competitors are Boston Scientific, Inari, Medtronic, Stryker, Terumo, AngioDynamics and several private companies.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for Penumbra’s 2023 earnings has remained constant at $2.04
The Zacks Consensus Estimate for 2023 revenues is pegged at $1.06 billion, indicating a 25.3% rise from the year-ago reported number.
Cardinal Health has a long-term estimated earnings growth rate of 15.9% compared with the industry’s 11.8%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%. Its shares have increased 33.6% compared with the industry’s 11.3% rise in the past year.
Stryker, carrying a Zacks Rank #2 at present, has an earnings yield of 3.39% against the industry’s -0.89%. Shares of the company have increased 33.8% compared with the industry’s 6.0% rise over the past year.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.09%. In the last reported quarter, it delivered an average earnings surprise of 5.81%.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 12.1% compared with the industry’s 11.5%. Shares of DVA have rallied 47.1% compared with the industry’s 11.6% rise over the past year.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%. In the last reported quarter, it delivered an average earnings surprise of 22.2%.
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Here's Why You Should Retain Penumbra (PEN) Stock for Now
Penumbra, Inc. (PEN - Free Report) is likely to grow in the coming quarters, backed by its robust portfolio expansion efforts. The strength exhibited in the Neuro franchise is highly optimistic for the company’s operations. A strong solvent balance sheet is an added plus. However, the impact of macroeconomic concerns and intense competition are concerning for Penumbra.
In the past year, this Zacks Rank #3 (Hold) stock has risen 4.8% compared with the industry’s 9.3% rise and the S&P 500’s 25.5% rise.
The global healthcare provider company has a market capitalization of $10.44 billion. PEN surpassed earnings estimates in each of the trailing four quarters, the average surprise being 55.6%.
Key Growth Catalysts
Strong Portfolio Expansion: The company’s consistent revenue growth momentum is being driven by extraordinary outcomes in patients treated with Lightning Flash, Lightning Bolt 7 and RED 72 with SENDit technology. Lightning Flash's transformative power, speed, safety and efficacy profile has been the biggest driver of the exceptional early adoption of the product. Penumbra is seeing an acceleration of Lightning Bolt 7 cases in the past few months of 2023 as conversion from surgery, lytics and other mechanical thrombectomy products are gaining momentum.
Image Source: Zacks Investment Research
The company has a robust pipeline, which it expects to launch over the next 18 months. This includes four new computer-assisted vacuum thrombectomy products in the United States. Combined with Flash and Bolt 7, Penumbra expects its CAVT portfolio to drive both market share and market growth in deep vein thrombosis, pulmonary embolism and arterial.
Improving Neuro Trend: 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. These products will continue to increase the company’s growth and market share in Neuro, particularly as physicians continue to realize the trade-off with oversized aspiration catheters in the market in the past several years.
Stable Solvency Structure: Penumbra exited the third quarter of 2023 with cash and cash equivalents of $249 million and a total debt of $24 million. The company did not have any short-term payable debt on its balance sheet. Total debt-to-capital of 2.1% is sequentially lower than 2.2% at the end of the second quarter.
Downsides
Macroeconomic Concerns: While the acute phase of the pandemic has subsided, the pandemic and the response have a 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 third quarter of 2023, the company’s total operating expenses were up 13.1% from that recorded in the prior-year quarter.
Tough Competitive Landscape: The medical device industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants. Penumbra competes with a number of manufacturers and distributors of neuro and vascular medical devices. The company’s most notable competitors are Boston Scientific, Inari, Medtronic, Stryker, Terumo, AngioDynamics and several private companies.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for Penumbra’s 2023 earnings has remained constant at $2.04
The Zacks Consensus Estimate for 2023 revenues is pegged at $1.06 billion, indicating a 25.3% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Cardinal Health (CAH - Free Report) , Stryker (SYK - Free Report) and DaVita (DVA - Free Report) .
Cardinal Health has a long-term estimated earnings growth rate of 15.9% compared with the industry’s 11.8%. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%. Its shares have increased 33.6% compared with the industry’s 11.3% rise in the past year.
CAH carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker, carrying a Zacks Rank #2 at present, has an earnings yield of 3.39% against the industry’s -0.89%. Shares of the company have increased 33.8% compared with the industry’s 6.0% rise over the past year.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.09%. In the last reported quarter, it delivered an average earnings surprise of 5.81%.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 12.1% compared with the industry’s 11.5%. Shares of DVA have rallied 47.1% compared with the industry’s 11.6% rise over the past year.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%. In the last reported quarter, it delivered an average earnings surprise of 22.2%.