) delivered a positive first-quarter earnings surprise of 30.8% on
April 26, but shares of this birth control company have been on an
upswing since January. Owing to an uptrend in earnings estimates,
stemming from an improved guidance, this company carries a Zacks #2
Higher Sales in the First Quarter
Conceptus reported a first quarter loss of 9 cents per share, which
was narrower than the Zacks Consensus Estimate for a loss of 13
cents. The stock price shot up 8.6% following the announcement.
Net sales increased 9.3% year over year to $29 million and
surpassed the Zacks Consensus Estimate by almost 4%. After several
quarters of declining or stagnating revenue, the improvement came
on the back of a gradual increase in domestic physician office
visits, the company's recently expanded field sales presence and a
favorable impact from its direct-to-consumer campaign.
Conceptus derives a major share of its revenues from Essure.
Domestic sales of Essure experienced an increase of 15.1% year over
year to $21.7 million. However, international sales declined 5.2%
to $7.3 million.
The company reported a gross profit of $23.9 million, up 11.7%. A
continued reduction in production cost and an increase in the
average selling price led to a higher gross margin (up 180 basis
points to 82.2%).
Conceptus increased its revenue guidance range for fiscal 2012 by
$1 million at both ends to $135 million to $139 million. The
company also raised its forecast for adjusted EBITDA to between $23
million and $25 million, compared with $22 million to $24 million
On April 30, Conceptus announced the settlement of its patent
infringement litigation related to Hologic's (
) competing Adiana Permanent Contraception System. As per the
agreement, Hologic agreed to withdraw its Adiana system from the
Earnings Estimates on the Upswing
In response to the improved outlook, earnings estimates have moved
up over the last 90 days. The Zacks Consensus Estimate for 2012 has
more than doubled to 9 cents per share, representing year-over-year
growth of more than 300.0%. For 2013, the Zacks Consensus Estimate
has increased over 26% to 19 cents per share, reflecting an implied
growth of 111%.
Conceptus trades at a premium to its peers by most metrics, such as
forward P/E, price-to-book and price-to-sales. The price-to-book
ratio of 4.16x is 39.1% higher than the peer group average of
2.99x. Similarly, on a price-to-sales basis, the stock is trading
at 4.96x, 53.1% higher than its peer group average of 3.24x. P/E
measures in this case are rendered largely meaningless, given the
loss-making nature of the enterprise. Its estimated long-term
earnings growth rate of 17.5% is in line with the industry average.
Chart Suggests a Breakout
After drifting in tandem with its 50-day moving average during the
second half of 2011, the chart reveals an upward trend over the
past few months. It is currently trading above both its 50- and
200-day averages. The one-year return for the stock is a lofty
75.3% compared to a 2.1% return from the S&P 500 Index.
Headquartered in Mountain View-California and established in 1992,
Conceptus (with a market cap of $643 million) primarily
manufactures and markets the Essure permanent non-surgical birth
control system. Essure has been available in the domestic market
since 2002 and over 550,000 procedures have been carried out
CONCEPTUS INC (CPTS): Free Stock Analysis
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