We recently upgraded our recommendation on
, a major neuromodulation company, to Outperform primarily based on
its strong future growth prospects.
Over the last few quarters, Cyberonics has consistently
delivered strong results through balanced sales growth worldwide.
In the last-reported quarter, total sales increased a robust 15%
year over year to $60.3 million with 40% rise in adjusted earnings
to 38 cents per share.
The upside in revenues was primarily attributable to robust
growth in U.S. epilepsy sales (increasing by 17%) and unit sales
(by 13%). The redesigned AspireHC generator that received FDA
approval in January this year contributed to 15% of the U.S.
generator unit sales in the reported quarter. Over 80% of the U.S.
generator sales came from Demipulse and AspireHC and all of the
company's U.S. leads came from its new perennial leads. We expect
all these product lines to boost Cyberonics' top-line performance
in the upcoming quarters.
Although international sales were sluggish (up 2.2% year over
year as a result of unfavorable foreign currency), growth was 9.8%
year over year on a constant exchange rate or CER basis. We are
also impressed with the company's initiatives to invest in market
development and achieve new patient and replacement cycle growth in
Europe and Japan.
In Europe, the company's increased investments and
organizational changes have proved helpful, with overall
performance in the region up double-digits on a sequential basis.
Moreover, the company deployed senior sales and marketing teams
from the U.S. in Europe and Japan in order to strengthen the
organization. Cyberonics expects all these initiatives to improve
its international performance for the rest of fiscal 2013.
Cyberonics is also focusing on strengthening its pipeline. The
company is currently working on the development of future
generations of Vagus Nerve Stimulation (VNS) Therapy System,
including generators which utilize cardiac and brain-based seizure
detection stimulation paradigms, rechargeable battery technology,
wireless communication technology and improved lead technology.
We remain concerned about the challenging macroeconomic scenario
and competitive pressures from
) in the neuromodulation space. However, considering the advantages
of the VNS therapy and the strong untapped potential in the
epilepsy market, we are optimistic about the growth prospects of
CYBERONICS INC (CYBX): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
To read this article on Zacks.com click here.