Abiomed, Inc. ( ABMD ) is slated to report third-quarter fiscal 2015 results before the opening bell on Jan 27. In the last reported quarter, this Danvers, MA-based company recorded a positive earnings surprise of a whopping 350% while the average earnings surprise over the past four quarters stands at 56.25%.
Let's see how things are shaping up for this announcement.
Factors to Consider
Abiomed, which specializes in developing medical devices designed to treat heart failure, is enjoying strong demand for its main product line - Impella heart pumps. The Impella platform, which comprises Impella 2.5, Impella 5.0, Impella CP, Impella LD and Impella RP, contributed nearly 91.2% of total revenues in the first half of fiscal 2015.
Abiomed's Impella utilization is also growing at a remarkable pace with an increasing number of hospitals and customer sites are purchasing the same. Notably, the total number of customer sites deploying Impella 2.5 and Impella CP reached 910 and 507, respectively, at the end of the second quarter of fiscal 2015.
Currently, the company expects to get a Pre-Market Approval (PMA) for the safety and effectiveness of Impella 2.5 by Feb/Mar 2015. We believe the anticipated approval of the Impella 2.5 in the current quarter will serve as a significant growth catalyst for the company.
The company also raised the lower end of its revenue guidance for fiscal 2015, which is another positive in our view. In our opinion, Abiomed's Impella platform has an enormous growth potential in the treatment of cardiovascular diseases and will significantly drive revenues, going forward.
However, competition among providers of treatments for heart-related diseases is intense and subject to rapid technological change and evolving industry requirements and standards. This will likely hurt pricing power and remains an overhang on the stock.
Our proven model does not conclusively show that Abiomed is likely to beat earnings this quarter as it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%, as both these estimates stand at 3 cents.
Zacks Rank: ABIOMED carries a Zacks Rank #2 (Buy) which increases the predictive power of ESP; but when combined with an ESP of 0.00%, it makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat:
Align Technology ( ALGN ) with an Earnings ESP of +2.04% and a Zacks Rank #3 (Hold).
Actavis ( ACT ) with an Earnings ESP of +4.70% and a Zacks Rank #3 (Hold).
Boston Scientific ( BSX ) with an Earnings ESP of +4.76% and a Zacks Rank #3 (Hold).