Cyberonics Slips to Sell on U.S. Woes, Estimate Revisions - Analyst Blog

On Aug 22, 2014, Zacks Investment Research downgraded Texas-based medical device producer Cyberonics Inc. ( CYBX ) to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold).

Reasons for the Downgrade

Cyberonics reported first-quarter fiscal 2015 results on Aug 21, 2014. Despite registering year-over-year improvements in the quarter, both its top and bottom line missed the respective Zacks Consensus Estimate.

Adjusted earnings per share for the reported quarter came in at 53 cents, missing the Zacks Consensus Estimate by 3 cents. On the other hand, Cyberonics' first-quarter revenues grossed $72.0 million improving 4.5% year over year but missing the Zacks Consensus Estimate by 2.7%.

Despite witnessing appreciable growth in the international market, Cyberonics experienced a slack business in the U.S. Growth in unit sales in the domestic market was a mere 2%. Moreover, the company's U.S. lead sales declined 5.3% to 1,170 units, from 1,235 units in the year-ago quarter. To add to that, headwinds like fall in new patient activity, recent slowdown in adoption of VNS Therapy implants and constant insurance-related challenges might raise concerns for investors.

Following the quarterly results, Cyberonics has witnessed downward estimate revisions for the current fiscal as 4 out of 6 analysts have pulled down their estimates. Consequently, the Zacks Consensus Estimate for earnings in 2015 and 2016 have also moved south.

Other Stocks to Consider

Better-ranked stocks in the medical instruments industry include Alphatec Holdings, Inc. ( ATEC ), RTI Surgical Inc. ( RTIX ) and Bacterin International Holdings, Inc. ( BONE ). While Alphatec and RTI Surgical sport a Zacks Rank #1 (Strong Buy), Bacterin holds a Zacks Rank #2 (Buy).

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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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