We retain our Neutral recommendation on
) following the company's record first-quarter fiscal 2013 results
which edged past the Zacks Consensus Estimates.
Adjusted earnings per share came in at 8 cents, surpassing the
year-ago loss of 11 cents, while revenues soared 42% year over year
to $38.8 million. The results reflect the burgeoning Impella
utilization in the domestic market. Moreover, the company's
operational efficiency contributed to margin expansion.
Abiomed exited the first quarter with a solid balance sheet
represented by a 37.4% year-over-year surge in cash and cash
equivalents and short-term marketable securities (to $81.2 million)
and no long-term debt. We find management's revised outlook for
fiscal 2013 encouraging, with revenues expected to grow at a
healthy double-digit clip.
The company has a wide portfolio of products that are
life-sustaining in nature. This factor hedges it from any sales
shortfall during economic downturns. The anticipated launch of
Impella cVAD in the U.S. next month and the expansion of the
company's footprint in Japan in 2013 are expected to be accretive
to the top-line.
Headquartered in Danvers, Massachusetts, Abiomed is a medical
device company with a blue streak growth path as reflected in the
company's revenues that portrayed an upward trend over the past few
quarters with consistent healthy double-digit growth. The sales are
expected to be helped by volume growth, brand building and product
development in the years ahead.
On the flip side, we are concerned about Abiomed's
overdependence on its recognized flagship brand Impella. In the
most recent quarter, revenues from Impella accounted for roughly
89% of the company's total sales. The company also anticipates that
this product will continue to drive growth in the near term. Thus
any disruption or delay in Impella sales will harm its business.
Moreover, the company's legacy (non-Impella) business is
Also, Abiomed faces intense competition from organizations
developing permanent heart assist products including
), Jarvik Heart and MicroMed Technology. This includes both product
and price competition.
While we are upbeat about the prospects of Impella, we remain
cautious about the reimbursement risk and current dismal condition
of the European economy. Our Neutral recommendation is backed by a
Zacks #3 Rank, which translates into a short-term Hold rating.
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