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AngioDynamics (ANGO) Up 10.8% Since Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for AngioDynamics, Inc. ANGO. Shares have added about 10.8% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

AngioDynamics Q4 Earnings Beat, Revenues Miss

Headquartered in Latham, NY, AngioDynamics Inc., a leading provider of minimally invasive medical devices, reported adjusted earnings of $0.19 per share for the fourth quarter of fiscal 2017.

Earnings beat the Zacks Consensus Estimate by $0.03 but remained flat year over year. The stock has delivered positive earnings surprises in the past four quarters at an average of 23.7%.

Meanwhile, net sales fell almost 7% on a year-over-year basis to $86.9 million, missing the Zacks Consensus Estimate of $91 million.

Highlights of the Quarter

Internationally, AngioDynamics registered revenues of $16.1 million, down 9.6% year over year. However, sales in the U.S. totaled $70.8 million, down 6.3%.

Peripheral Vascular (PV) business:Sales at this segment were $53.9 million in the reported quarter, lower than $55.6 million in the year-ago quarter.

Despite the disappointing performance, management expects the ‘Thrombus Management’ platform in the PV product line to provide the company with a competitive advantage and open up significant long-term opportunities.

We note that AngioDynamics is a leading player in the thrombolytic catheters space (catheter directed thrombolysis). The company boasts highly unique catheters like Uni-Fuse, SpeedLyser and Pulse Spray under the thrombus portfolio.

Vascular Access (VA) business: Sales at this segment declined almost 2.2% year over year to $24.2 million, partially offset by solid growth at BioFlo Midlines and Dialysis.

The BioFlo line of products at the segment is expected to be a key catalyst.

Oncology/Surgery business: Sales at this segment plunged over 33% from the year-ago quarter to $8.9 million owing to lower sales of ablation products and NanoKnife capital.

The segment performed unimpressively primarily due to the market withdrawal of the company’s flagship Acculis Microwave Tissue Ablation System.

The recall also affected the company’s international sales. Precisely, this had an overall negative impact of $4.5 million on earnings. Per management, without the recall of Acculis, net revenues would have totaled $352 million, within the previously guided range.

FY17 Highlights

Net sales for fiscal 2017 were $349.6 million, down 1.2% from $353.9 million a year ago. AngioDynamics registered adjusted earnings of $0.73 per share, up 22% on a year-over-year basis.

Per management, the year-over-year decline in sales was primarily led by unimpressive performances by the company’s VA (28.1 % of net sales) and Oncology segments (13.8% of net sales). However, this was partially offset by growth in the PV segment (58.1% of net sales).

In this regard, the PV segment saw a 1% rise to $208.6 million on a year-over-year basis. PV sales were driven by growth in the core Angiographic Catheter business. However, sales at the VA and oncology segments declined 3% and 9%, respectively, on a year-over-year basis.

Margin Details

Adjusted gross margin increased 100 basis points (bps) to 51.8% in the quarter.

Adjusted EBITDAS in the fourth quarter of fiscal 2017, excluding the items shown in the attached reconciliation table, was $15.0 million compared with $14.2 million in the fourth quarter of fiscal 2016.

Coming to operating expenses, sales & marketing (S&M) and research & development (R&D) expenses declined 30 bps and 10 bps, respectively, as a percentage of revenues. However, general & administrative (G&A) expenses rose 230 bps on a year-over-year basis.

Financial Condition

AngioDynamics had a strong cash flow balance in the fourth quarter. Per management, it generated $19 million in operating cash flow and $18.3 million in free cash flow.

Additionally, AngioDynamics ended the quarter with $47.5 million in cash and cash equivalents and outstanding debt of $97.5 million.

Guidance

For fiscal 2018, the company expects adjusted earnings per share in the band of $0.64 to $0.68.

The company projects fiscal 2018 revenues in the range of $352 million to $359 million.

Furthermore, free cash flow is expected to be over $35 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last month as none of them issued any earnings estimate revisions. The consensus estimate however shifted lower by 5.9% in the same time frame.

AngioDynamics, Inc. Price and Consensus

 

AngioDynamics, Inc. Price and Consensus | AngioDynamics, Inc. Quote

VGM Scores

Currently, AngioDynamics's stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.


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