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SurModics (SRDX) Beats Earnings & Revenue Estimates in Q1
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Surmodics, Inc. (SRDX - Free Report) reported earnings of 19 cents per share in the first-quarter of fiscal 2017 (ended Dec 31, 2016), surpassing the Zacks Consensus Estimate of 9 cents. Reported earnings were, however, lower than the year-ago figure of 38 cents.
Revenues in the quarter increased 7.4% to $17.8 million. Reported revenues were also above the Zacks Consensus Estimate of $16 million.
Stock Performance
Over the past one year, the stock added 34.06%, comparing favorably with the Zacks classified Medical Products sub-industry’s gain of 12.84%. Also, a long-term expected earnings growth rate of 15.00% instills confidence in investors. Quarter in Detail
Surmodics reports revenues in two segments – In Vitro Diagnostics (IVD) and Medical Device.
Medical Device
In the reported quarter sales surged 12.3% to $13.8 million. The growth came from higher product sales, royalties, research, development and other revenue.
In Vitro Diagnostics (IVD)
In the reported quarter sales fell 6.8% to $4.0 million. The downside came from lower sales in several product categories as well as a decline from a significant microarray customer that had been acquired by one of the company’s competitors.
Balance Sheet and Cash Flow
As of Dec 31, 2016, the company had $17.7 million of Cash and cash equivalents versus $25.0 million at the end of the sequential quarter. Surmodics generated cash from operating activities of $2.0 million in the first quarter of fiscal 2017. Capital expenditures totaled $1.5 million in the reported quarter.
Outlook
Surmodics expects fiscal 2017 earnings in the range of 18 cents to 33 cents per share as compared with prior guidance of 15 cents to 35 cents per share. Meanwhile, revenues are expected in the range of $64.0 million to $68.0 million, up from a previous range of $63.0 million to $67.0 million.
Our Take
We are impressed by Surmodics’ first-quarter fiscal 2016 results, wherein it beat on both earnings and revenues. We are also encouraged by the company’s recent acquisitions of Creagh Medical and NorMedix Inc., as well as its progress on the SurVeil drug-coated balloon platform.
However, the impact of the U.S. patent expiration of the company’s third-generation hydrophilic coatings is anticipated to increase in the upcoming quarters as customers have largely depleted the inventories stocked before the patent expiration.
Moreover, the company expects IVD business to grow in the mid single digits, compared to double-digit gains realized in fiscal 2016, due to anticipated top-line headwinds in the near term.
Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock recorded an impressive one-year return of 175.5%.
Avinger projects sales growth of 2.3% for the current year. Additionally, the company posted a positive earnings surprise of 27% in the last quarter.
Dextera Surgical has a long-term expected earnings growth rate of approximately 25%. Notably, the stock posted an impressive one-month return of 51.04%.
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SurModics (SRDX) Beats Earnings & Revenue Estimates in Q1
Surmodics, Inc. (SRDX - Free Report) reported earnings of 19 cents per share in the first-quarter of fiscal 2017 (ended Dec 31, 2016), surpassing the Zacks Consensus Estimate of 9 cents. Reported earnings were, however, lower than the year-ago figure of 38 cents.
Revenues in the quarter increased 7.4% to $17.8 million. Reported revenues were also above the Zacks Consensus Estimate of $16 million.
Stock Performance
Over the past one year, the stock added 34.06%, comparing favorably with the Zacks classified Medical Products sub-industry’s gain of 12.84%. Also, a long-term expected earnings growth rate of 15.00% instills confidence in investors.
Quarter in Detail
Surmodics reports revenues in two segments – In Vitro Diagnostics (IVD) and Medical Device.
Medical Device
In the reported quarter sales surged 12.3% to $13.8 million. The growth came from higher product sales, royalties, research, development and other revenue.
In Vitro Diagnostics (IVD)
In the reported quarter sales fell 6.8% to $4.0 million. The downside came from lower sales in several product categories as well as a decline from a significant microarray customer that had been acquired by one of the company’s competitors.
Balance Sheet and Cash Flow
As of Dec 31, 2016, the company had $17.7 million of Cash and cash equivalents versus $25.0 million at the end of the sequential quarter. Surmodics generated cash from operating activities of $2.0 million in the first quarter of fiscal 2017. Capital expenditures totaled $1.5 million in the reported quarter.
Outlook
Surmodics expects fiscal 2017 earnings in the range of 18 cents to 33 cents per share as compared with prior guidance of 15 cents to 35 cents per share. Meanwhile, revenues are expected in the range of $64.0 million to $68.0 million, up from a previous range of $63.0 million to $67.0 million.
Our Take
We are impressed by Surmodics’ first-quarter fiscal 2016 results, wherein it beat on both earnings and revenues. We are also encouraged by the company’s recent acquisitions of Creagh Medical and NorMedix Inc., as well as its progress on the SurVeil drug-coated balloon platform.
However, the impact of the U.S. patent expiration of the company’s third-generation hydrophilic coatings is anticipated to increase in the upcoming quarters as customers have largely depleted the inventories stocked before the patent expiration.
Moreover, the company expects IVD business to grow in the mid single digits, compared to double-digit gains realized in fiscal 2016, due to anticipated top-line headwinds in the near term.
Surmodics, Inc. Price, Consensus and EPS Surprise
Surmodics, Inc. Price, Consensus and EPS Surprise | Surmodics, Inc. Quote
Key Picks
Currently Surmodics carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader medical sector include Addus Glaukos Corporation (GKOS - Free Report) , Avinger, Inc. (AVGR - Free Report) and Dextera Surgical Inc. . Notably, Glaukos sports a Zacks Rank #1 (Strong Buy) while Avinger and Dextera Surgical carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock recorded an impressive one-year return of 175.5%.
Avinger projects sales growth of 2.3% for the current year. Additionally, the company posted a positive earnings surprise of 27% in the last quarter.
Dextera Surgical has a long-term expected earnings growth rate of approximately 25%. Notably, the stock posted an impressive one-month return of 51.04%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>