On Apr 10, we reaffirmed our long-term Outperform
) based on consistent strong results and excellent growth
potential. This prominent player in the neuromodulation space
carries a Zacks Rank #1 (Strong Buy).
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Our positive bias on Cyberonics is supported by strong growth in
the U.S. on the heels of epilepsy device sales. Moreover, the
company also garnered record high revenues in the overseas market
on the back of double-digit growth in Europe. The sharpened focus
on Japan should support the top line in the coming quarters.
According to recent statistics from U.S. Centers for Disease
Control and the National Epilepsy Foundation, there exists a
sizeable market opportunity in the U.S. As Cyberonics is a major
player in the epilepsy market, we believe that the company will
be able to sustain its market-leading growth rate. Given the
prevailing underpenetration in the global market, increasing
utilization and adoption of Cyberonics' offerings should drive
growth going forward.
Further, Cyberonics' presence is not limited to the market for
epilepsy treatment. The company is currently engaged in
discussions with Centers for Medicare & Medicaid Services
(CMS) to reconsider reimbursement coverage for VNS Therapy for
all treatment-resistant depression (TRD) indications.
Additionally, the company is working on VNS Therapy treatment for
other indications like Obstructive Sleep Apnea (OSA) and Chronic
Heart Failure (CHF). Cyberonics' effort to strengthen its
pipeline improves its growth prospects.
Additionally, Cyberonics continues to reward shareholders with
attractive share repurchases. The share repurchase program will
allow the company to further leverage earning power going
The revision in the Zacks Consensus Estimates also reflects
bullish sentiments for the ongoing and next fiscal. Over the last
60 days, the Zacks Consensus Estimate inched up 5.6% to $1.70 for
fiscal 2013, reflecting annualized growth of 33.54%. For fiscal
2014, the Zacks Consensus Estimate improved 5.5% to $1.93,
reflecting growth of 13.68%.
Other Stocks to Consider
Cyberonics is not the only medical device stock that warrants a
look. Other industry players such as
Given Imaging Ltd.
), carrying a Zacks Rank #1, are also worth considering.