On Aug 7, 2013, Zacks Investment Research upgraded
) - a medical technology company with core expertise in
neuromodulation - to a Zacks Rank #1 (Strong Buy). The upgrade
came on the back of Cyberonics' consistent better-than-expected
quarterly results in the recent past.
Why the Upgrade?
Cyberonics witnessed rising earnings estimates on the back of
excellent fourth-quarter fiscal 2013 results. This Houston,
Texas-based company delivered positive earnings surprises in all
of the last four quarters with an average beat of 12.26%. The
long-term expected earnings growth rate for this stock also
stands at an impressive 17.5%.
Over the last few quarters, Cyberonics has performed
consistently and has exceeded the Zacks Consensus Estimate. The
company continues to witness soaring demand for its VNS Therapy
for the treatment of refractory epilepsy. The second successive
fiscal year of solid overseas growth, amid several macroeconomic
uncertainties in the European market, was encouraging. With
rising uptake of its VNS therapy across the globe, Cyberonics
increased its guidance for the ongoing fiscal.
The market for epilepsy is huge and still to a great extent
underpenetrated in the U.S. Recent data shows that nearly 2.7
million people in the U.S. are suffering from epilepsy leading to
around 4 lac potential patients (with drug-resistant epilepsy)
Moreover, data shows that each year a minimum of 1.25 lac
epilepsy patients are detected, leading to 15,000-24,000 new
patients for the company. Cyberonics believes that this rapidly
growing market has huge potential to maintain its growth
As a result of these bullish factors, the tendency for an
upward estimate revision has been obvious in recent times. The
Zacks Consensus Estimate for 2013 has increased by 3.1% to $1.99
per share, as all the estimates were revised higher over the last
Stocks to Consider
Other Medical Devices companies that are expected to
significantly outperform over the near term are
Align Technology Inc.
). All three stocks carry a Zacks Rank #1 (Strong Buy).
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