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Penumbra (PEN) Loss Meets Estimates, Revenues Beat in Q2

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Penumbra, Inc. PEN reported second-quarter 2017 loss per share of 5 cents, comparing unfavorably with earnings of 9 cents in the year-ago quarter. The loss figure was in line with the Zacks Consensus Estimate.

Revenues in the reported quarter rose 23.8% year over year (up 24.6% at constant exchange rate or CER) to $80.6 million, exceeding the Zacks Consensus Estimate of $78 million.

On a geographic basis, second-quarter revenues in the U.S. (representing 66.3% of total sales) grossed $53.4 million, up 22.3% from the year-ago quarter figure (same at CER). Meanwhile, international sales (33.7% of total sales) advanced 26.9% year over year (up 29.4% at CER) to $27.2 million.

Penumbra, Inc. Price, Consensus and EPS Surprise


Penumbra, Inc. Price, Consensus and EPS Surprise | Penumbra, Inc. Quote

Going by product category, revenues from neuro products grew 23.9% (or up 24.8% at CER) to $56.2 million in the second quarter of 2017. Revenues from peripheral vascular product business rose to $24.4 million in the second quarter, reflecting an increase of 23.5% (or up 24.1% at CER) year over year.

Operational Update

Penumbra’s second-quarter gross margin was 63.2%, reflecting a 50 basis point (bps) contraction year over year on account a 25.5% rise in cost of revenue. However, gross profit rose 22.8%.

Research and development expenses totaled $8.1 million, up 29.2%, while sales, general and administrative expenses amounted to $44.1 million, up 23.1% year over year. Operating loss in the reported quarter came in at $1.3 million, massively wider than the operating loss of $0.67 million in the prior-year quarter.

Financial Update

Penumbra exited the second quarter of 2017 with cash and cash equivalents of $76.6 million as compared with $109.3 million at the end of the first quarter.

Our Take

Penumbra exited second-quarter 2017 on a mixed note, with the company reporting impressive top-line results. Revenues exceeded the Zacks Consensus Estimate while the loss figure was in line with the same. Although, the year-over-year comparison of earnings was unfavorable, the company witnessed strong growth across all its geographies and product lines. The company is putting efforts in product innovation through research and development. However, escalating costs and expenses affected margins.

Penumbra is an active player in the fast-growing interventional therapies space. In fact, the company’s products primarily cater to the unmet clinical needs across two major markets – neuro and peripheral vascular.

Zacks Rank & Key Picks

Penumbra has a Zacks Rank #3 (Hold). A few better-ranked medical stocks are Edwards Lifesciences Corporation (EW - Free Report) , INSYS Therapeutics, Inc. INSY and Align Technology, Inc. ALGN. Notably, Edwards Lifesciences, INSYS Therapeutics and Align Technology sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

INSYS Therapeutics has a long-term expected earnings growth rate of 20%. The stock posted a stellar four-quarter average earnings surprise of 60.7%.

Align Technology has an expected long-term adjusted earnings growth of almost 26.6%. The stock has added roughly 26.7% over the last three months.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has gained around 5% over the last three months.

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