CryoLife (CRY) Now a Strong Buy on Solid Estimate Revisions

On Dec 27, CryoLife Inc.CRY was upgraded to a Zacks Rank #1 (Strong Buy). Headquartered in Kennesaw, GA, the company manufactures and distributes medical devices worldwide.

Why the Upgrade?

The stock represents a stellar year-to-date gain of almost 79.5%, way better than the Zacks categorized Medical Instruments sub-industry's growth of roughly 0.6% and the S&P 500's return of 7.8%.

In fact, post a solid performance in the last quarter, the company's shares gained almost 15.8%, raising investors' hopes. The stock promises an earnings yield of 2.21%, compared to the industry's negative yield of 4.13%.

Coming to projected sales, the stock holds a growth rate of 25.16% for the current year, compared with the industry's 6.47%. CryoLife registered positive earnings surprises in the last four quarters, the average being 333.75%.

Strong Catalysts

The acquisition of On-X Life, a TX-based mechanical heart valve company, is a key growth driver for CryoLife. Notably, the acquisition marked CryoLife's advent into the Mechanical Heart Valve market, which is expected to reach $4.80 billion by 2020, growing at a CAGR of 9.1% globally ( Markets And Markets ). Notably, the acquisition represented year-over-year revenue growth of 6% in the just reported third quarter of 2016.

CryoLife reported stellar third-quarter results, with adjusted earnings of 13 cents per share crushing the Zacks Consensus Estimate of 4 cents. Revenues of $45.3 million were in line with the estimate mark, but increased almost 21.6% on a year-over-year basis.

The BioGlue product line in the U.S. and international markets have also been a significant positive for the stock. Notably, total BioGlue sales in the third quarter were $15.9 million, up 12% year over year, courtesy of solid sales in France and Japan. In fact, CryoLife is on track to start enrollment under the BioGlue clinical trial platform in the first quarter of 2017 in China.

Coming to the forecasts, CryoLife expects to end the year with a solid fourth quarter. Revenues for the full year are projected in the band of $181-$182.5 million, up from the previous range of $180-$182 million. Adjusted earnings are expected in the range of 43-45 cents per share, compared to the previous guidance of 32-34 cents.

Estimate Revisions

The estimate revision trend for the current quarter is pretty favorable at the moment with one estimate going up and no downward movement over the last 60 days. The Zacks Consensus Estimate stands at 8 cents per share.

CRYOLIFE INC Price and Consensus

CRYOLIFE INC Price and Consensus | CRYOLIFE INC Quote

The estimate for full-year 2016 is currently pegged at 44 cents per share, which moved up 10 cents over the last three months. Meanwhile, the estimate for full-year 2017 has been revised upward by 5 cents to the present 43 cents per share over the same time frame.

Key Picks

Other well-ranked medical stocks are NxStage Medical Inc. NXTM , Align Technology, Inc. ALGN and Haemonetics Corporation HAE . NxStage Medical and Align Technology sport a Zacks Rank #1, while Haemonetics carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

NxStage Medical gained 19.4% over the last one year. The company has a four-quarter average positive earnings surprise of 46.3%.

Align Technology rallied 47.2% year to date. It has a trailing four-quarter average positive earnings surprise of 23%.

Haemonetics recorded a gain of 24% year to date. It has a trailing four-quarter average positive earnings surprise of 0.82%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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