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Abiomed: A Strong Buy on Impressive Q3, Estimate Revision - Analyst Blog

On Jan 31, 2015, Zacks Investment Research upgraded Abiomed Inc. (ABMD) by a notch to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

We believe that Abiomed’s strong third-quarter fiscal 2015 results, raised fiscal 2015 guidance and the recent FDA HDE approval for its Impella RP System are the primary factors justifying the upgrade. Driven by these aspects, Abiomed has been witnessing a positive trend in earnings estimate revisions.

For fiscal 2015, four estimates moved north in the past one week with no negative revision during the same time frame. Remarkably, this caused the Zacks Consensus Estimate to move up to its current level of 48 cents from 15 cents a week ago.

Also, for fiscal 2016, three estimates moved up in the last 7 days, lifting the Zacks Consensus Estimate by 41.5% or 17 cents, to stand at 58 cents a share.

On Jan 28, 2015, Abiomed posted impressive third-quarter results wherein both earnings and revenues crushed their respective Zacks Consensus Estimates and also showed remarkable year-over-year growth. In fact, this Danvers, MA-based company has clocked an average earnings surprise of around 238% in the last four quarters.

On the same day, the company received an FDA approval for its Impella RP System under a Humanitarian Device Exemption (HDE). Notably, this makes Impella RP the first percutaneous single access heart pump designed for right heart support to receive regulatory clearance.

We note that the company’s revenues are being driven by robust performance from its Impella product line. Also, Impella utilization is growing at a remarkable pace with an increasing number of hospitals and customer sites purchasing the same. Notably, an additional 21 hospitals purchased Impella heart pumps during the third quarter, reaching the installed customer base to 931 sites at the end of the quarter.

Abiomed also raised its fiscal 2015 revenue guidance which is another positive in our view. The company now expects revenues in the range of $223–$226 million (up from the earlier guidance of $209–$212 million. The upgraded guidance reflects year-over-year revenue growth of 21% to 23%.

We believe that the anticipated Pre-Market Approval of the Impella 2.5 by Feb/Mar 2015 will serve as a significant growth catalyst for the company. 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.

Moreover, it is worth mentioning that the company’s long-term expected earnings growth rate stands higher at 22.7% compared with industry growth of 18%.   

Other Stocks to Consider

Other well-performing stocks include Inogen (INGN) and Synergetics USA (SURG) in the medical instruments industry and BioTelemetry (BEAT) in the medical services industry. All these stocks sport a Zacks Rank #1 (Strong Buy).


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ABIOMED INC (ABMD): Free Stock Analysis Report
 
SYNERGETICS USA (SURG): Free Stock Analysis Report
 
BIOTELEMETRY (BEAT): Free Stock Analysis Report
 
INOGEN INC (INGN): Free Stock Analysis Report
 
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