Surmodics, Inc. (SRDX - Free Report) is currently one of the top performing stocks in the MedTech space. Focus on research and development (R&D) and raised guidance for fiscal 2018 currently favor the stock.
Shares of this Zacks Rank #1 (Strong Buy) have skyrocketed 193.7% compared with the industry’s 18% increase in a year’s time. The current level is also higher than the S&P 500 index’s return of 15.7%.
Which Way are Estimates Treading?
For the current quarter, the Zacks Consensus Estimate for loss per share is pegged at a penny. The same for revenues is pinned at $22.5 million, reflecting year-over-year growth of 12.4%.
For the current year, the Zacks Consensus Estimate for earnings per share stands at 43 cents. The same for revenues is pegged at $80.8 million, showing growth of 10.6% from the previous year.
Let’s delve deeper.
Factors That Make it an Attractive Pick
Focus on R&D
Continued efforts to improve its R&D stature has been a key catalyst for Surmodics. The company’s whole product solutions pipeline and sirolimus-based below-the-knee DCB program deserve a mention here. Earlier, this year, the company launched MatrixGuard Diluent, which helps it achieve the goal of maximum blockade of matrix interferences. This is likely to augment Surmodics' IVD (In Vitro Diagnostics) unit.
Furthermore, Surmodics reached an agreement with Embolitech to acquire an innovative thrombectomy platform technology. This will further boost its R&D portfolio.
In fact, in the last-reported quarter, the company’s R&D expenses were $9.8 million, up 23.4% year over year. Considering its strength in the R&D prospects, Surmodics has long-term goals of achieving double-digit top-line growth by the end of calendar 2019 and generating EBITDA margins at or above 30% by fiscal 2021.
Management has further confirmed that Surmodics aims to advance its R&D whole product solutions pipeline by securing regulatory clearances for at least four new products in fiscal 2018. For the fourth quarter of fiscal 2018, management expects R&D expenses to accelerate.
Surmodics has raised the guidance for fiscal 2018.
The company expects revenues of $79-$81 million, up from the previous anticipation of $75-$79 million.
Additionally, it expects fiscal 2018 earnings per share of 39-44 cents compared with previous estimates of negative 6 cents and 9 cents.
Other Key Picks
Some other top-ranked stocks from the broader medical space are athenahealth , Intuitive Surgical (ISRG - Free Report) and Masimo Corporation (MASI - Free Report) .
athenahealth has a long-term expected earnings growth rate of 17.6%. The stock currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical’s expected long-term earnings growth rate is 14.7%. The stock presently sports a Zacks Rank #1.
Masimo’s long-term earnings growth rate is projected at 14.8%. The stock currently carries a Zacks Rank #2 (Buy).
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