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Abiomed (ABMD) Down 11.7% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Abiomed (ABMD - Free Report) . Shares have lost about 11.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Abiomed due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Abiomed Q2 Earnings Beat Estimate, Sales in Europe Surge

Abiomed reported second-quarter fiscal 2019 earnings per share of 81 cents, which surpassed the Zacks Consensus Estimate by 11%. Adjusted earnings skyrocketed 84.1% from the year-ago quarter’s tally.

Revenues in the reported quarter came in at $181.8 million, outpacing the Zacks Consensus Estimate of $175.3 million. Revenues also increased 36.9% from the prior-year quarter’s figure.

Q2 in Detail

Geographic Analysis

Per management, U.S. revenues rose 33% year over year to $158 million, driven by a 29% increase in overall patient utilization in the second quarter.Outside the United States, revenue was $24 million, up 67% from the year-ago quarter.

European revenues increased 38% while German revenues were up 33%, year over year.

Additionally, the company saw revenues of $4.1 million in Japan, with 35 hospitals trained and 83 hospitals approved by the government.

Impella Sustains Momentum

Abiomed’s flagship Impella heart pump revenues totaled $175.3 million in the second quarter, globally. Per management, this is a year-over-year upside of 38%.

U.S. Impella heart pump revenue totaled $152.2 million in the reported quarter, reflecting an increase of 34% from the prior-year quarter.

Outside the United States, Impella heart pump revenue for the second quarter totaled $23.1 million, up 67% year over year.

Furthermore, the Impella 2.5 and CP were placed at approximately 1,250 sites in the United States by the end of the reported quarter. Additionally, the Impella 5.0 and RP were placed at 559 and 368 sites, respectively.

Margin Trends

In the quarter under review, gross margin was 83.6%, down 10 basis points (bps) year over year. Per management, the benefit from higher volume was offset by manufacturing investments such as direct labor hires to support future growth.

Research & Development (R&D) costs in the second quarter were $22.7 million, up 17.2% year over year.

Operating income in the quarter grossed $50.3 million, up 58.6% on a year-over-year basis. Operating margin was 27.7%, expanding 380 bps year over year.

Financial Condition

Abiomed’scash and marketable securities for the fiscal second quarter were $410.4 million. The company currently has no debt.

FY19 Outlook

Abiomed raised its fiscal 2019 guidance.

For fiscal 2019, the company expects revenues in the band of $765 million-$770 million, showing an increase of 29-30% from the previous fiscal. This compares to the earlier provided guidance of $755 million-$770 million, showing a year-over-year rise of 27. The present range is also higher than Abiomed’s initial forecast of $740 million-$770 million, up 25 from the prior year.

Notably, the Zacks Consensus Estimate is pegged at $768.2 million, within the guided range.

Abiomed expects to see strong contribution from its core Impella product lines in the quarters ahead.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Abiomed has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Abiomed has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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