Leading cardiac assist devices maker,
) recently approved a share repurchase program of up to $15
million of its common stock, thereby leveraging earnings power.
The company will finance the program with the available cash.
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The company exited its last reported quarter with cash, cash
equivalents and short-term marketable securities of $89 million,
46.4% higher than the previous-year quarter. The company had no
However, neither did the company specify the exact timing and
duration of the share repurchase program nor did it reveal
whether it will buyback shares in the open market or via private
The decision reflects the company's confidence in its
fundamentals. At the same time, the share buyback will help it
reduce the share count, thereby increasing earnings per share and
return on equity. The announcement is not only expected to
reinforce shareholders' confidence but also boost the market
value of the outstanding shares.
Massachusetts-based Abiomed is engaged in developing,
manufacturing and marketing of medical products designed to
assist or replace the pumping function of the failing heart. With
a market-cap of $535 million, the company is enjoying strong
demand for its Impella products. Impella utilization continues to
grow at a healthy pace, as is evident from the increasing number
of patients being treated with the device.
However, we are aware of negative sentiments amongst investors
regarding the Impella 2.5 investigation process. In this
scenario, its competitors, such as
), will likely take advantage of the situation and gain market
share. Our 'Neutral' recommendation on the stock carries a
short-term Zacks #3 Rank (Hold) rating.