Here's Why You Should Invest in Surmodics (SRDX) Right Now
Surmodics, Inc. SRDX is currently one of the top-performing stocks in the MedTech sector. Further, an improvement in share price and strong fundamentals indicate its bull run.
Surmodics’ shares have gained more than 13.5% in the last six months, outperforming the 0.2% growth of its industry. The stock has a Zacks Rank #2 (Buy).
Let’s focus on the factors that make Surmodics an attractive pick for investors.
What Makes Surmodics a Solid Pick?
IVD Segment Holds Promise
Surmodics’ performance continues to be driven by its In Vitro Diagnostics (IVD) segment. For more than 35 years, the segment has been a leader in developing an ELISA/EIA, immunoblot/western blot, line assay or microarray.
In the first quarter of fiscal 2018, sales in the segment rose 5.9% to $4.2 million. The upside came from strong growth as well as stabilization in BioFX, microarray and antigen product sales. IVD operating income in the quarter was $1.7 million compared with $1.5 million in the first quarter of fiscal 2017.
Strong sales of stabilization reagents and molecular diagnostics products bolstered the IVD segment. The company plans to continue to develop and grow Surmodics' core medical device coatings and diagnostic reagents businesses.
Favorable Tidings on Regulatory Front
Surmodics received IDE approval from the FDA for its SurVeil DCB pivotal study named TRANSCEND. SurVeil is a paclitaxel drug-coated balloon which is used for the treatment of femoral-popliteal disease. In the first quarter of fiscal 2018, Surmodics announced that the study is formulated to enroll approximately 446 patients at almost 60 clinical sites in the United States and 18 in European Union.
Per management, the TRANSCEND trial is for treatment of peripheral artery disease in the upper leg and poses competition to Medtronic’s IN.PACT Admiral drug-coated balloon platform. Further, the trial is among the first studies to evaluate next-generation drug-coated balloon with the ones that are commercially available. The regulatory development will lend Surmodics a competitive advantage over its peers in the niche space.
In the non-drug delivery R&D pipeline, Surmodics got the FDA clearance for its Telemark support microcatheter. The Telemark support microcatheter offers superior crossability for complex coronary and peripheral lesions.
Consistent Efforts to Boost R&D
Surmodics’ solid efforts to improve its research and development stature have been a key growth driver. The company’s whole product solutions pipeline and sirolimus-based below-the-knee DCB program deserve a mention here. It has been making progress using its internally developed .014 balloon platform.
The company has also been working through the preclinical studies for the data package that will be used to determine the readiness for first in-human clinical trial. The company is expected to make continued progress throughout the rest of fiscal 2018. The company made considerable progress in the development of its AV fistula drug-coated balloon.
Zacks Rank & Key Picks
A few other top-ranked stocks in the broader medical sector are athenahealth, Inc. ATHN, Bio-Rad Laboratories, Inc. BIO and Centene Corporation CNC. Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
athenahealth has an expected long-term growth rate of 17.7% and projected earnings per share growth rate of 21.5%.
Bio-Rad has an expected long-term growth rate of 20% and projected earnings per share growth rate of 20%.
Centene has an expected long-term growth rate of 14.4% and projected earnings per share growth rate of 14.4%.
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