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Here's Why You Should Invest in Surmodics (SRDX) Stock Now

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Surmodics, Inc. (SRDX - Free Report) is expected to gain from strong growth in theIn Vitro Diagnostics (IVD)segment. Further, the company’s consistent efforts to boost research and development (R&D) functionalities buoy optimism.

Price Performance

In a year’s time, shares of this Zacks Rank #2 (Buy) company have surged 75.2%, against the industry’s 4.5% decline and the S&P 500 index’s fall of 6.6%.

Let us take a quick look at the factors that make Surmodics a solid pick for now.

IVD Segment Driving Growth

Surmodics’ performance continues to be driven by the IVD unit. For more than 35 years, the segment has been a leader in developing an ELISA/EIA, immunoblot/western blot, line assay or microarray.

In the fourth quarter of fiscal 2018, sales in the IVD increased 13.4% to $6.1 million. Per management, the segment saw strong growth in antigen and DNA slide sales in the quarter.

However, operating income in the segment was $2.4 million in the reported quarter, marginally down from the year-ago quarter’s tally. Notably, IVD revenues in the fourth quarter reflected strong growth in antigen and DNA slide sales.

Consistent Efforts to Boost R&D

Surmodics’ efforts to improve R&D stature are a key growth driver. The company’s whole product solutions pipeline and sirolimus-based below-the-knee DCB program deserve a mention here.

Fiscal fourth-quarter R&D expenses were $9.8 million, up 23.4% year over year. Considering the company’s strength in the R&D prospects, it has long-term goals of generating double-digit top line growth by the end of 2019 and EBITDA margins at or above 30% by fiscal 2021.

Which Way Are Estimates Treading?

For the first quarter of fiscal 2019, the Zacks Consensus Estimate is pegged at a loss of a penny, reflecting year-over-year decline of 101%. The same for revenues isat $18.9 million, marking 11.1% improvement year over year.

For fiscal 2019, the Zacks Consensus Estimate for earnings is pinned at 8 cents. For revenues, estimates are pegged at $93.3 million, indicating 14.8% rise year over year.

Surmodics, Inc. Price and Consensus

 

Other Stocks to Consider

A few other top-ranked stocks in the broader medical space are Veeva Systems Inc (VEEV - Free Report) , Penumbra, Inc (PEN - Free Report) and OPKO Health, Inc (OPK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Veeva Systems’ long-term earnings growth rate is projected at 19.5%.

Penumbra has a long-term earnings growth rate of 20%.

OPKO Health’s long-term earnings growth rate is projected at 12%.

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