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Avanos Medical (AVNS) Up 0.1% Since Last Earnings Report: Can It Continue?

Zacks Equity Research
·3 mins read

A month has gone by since the last earnings report for Avanos Medical (AVNS). Shares have added about 0.1% in that time frame, underperforming the S&P 500.

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

Avanos Medical Q1 Earnings Lag Estimates, Revenues Top

Avanos Medical, Inc. reported adjusted earnings per share of 16 cents in first-quarter 2020, which missed the Zacks Consensus Estimate of 17 cents by 5.9%. However, the bottom line improved 6.7% from the prior-year quarter.

Revenues of the company were $180.4 million, which beat the Zacks Consensus Estimate by 4%. The top line also improved 9.9% on a year-over-year basis.

Q1 Segmental Analysis

Chronic Care

Net revenues at this segment of $115.7 million rose 15.7% year over year.

Pain Management

The segment reported net revenues of $64.7 million. The metric inched up 0.8% on a year-over-year basis.

Margin Analysis

Adjusted gross profit came in at $105.6 million, up 4.5% from the prior-year quarter figure. Adjusted gross margin was 58.5% of net revenues, down 310 bps year over year.

Research and development expenses totaled $9.4 million, down 7.8% year over year. Selling, general and administrative expenses amounted to $91.1 million, down14.4%.

Adjusted operating profit in the first quarter was $14.4 million, up 38.5% from the year-ago quarter.

Financial Update

As of Mar 31, 2020, cash and cash equivalents totaled $187.7 million, down 8.6% from year-end 2019.

Net cash used in operating activities for the three months ended Mar 31, 2020, totaled $5.8 million, compared with $23.1 million in the prior-year quarter.

Guidance

In view of the rapidly evolving healthcare environment and the ongoing uncertainties related to the COVID-19 pandemic, the company has withdrawn its previously issued (provided on Feb 25, 2020) full-year 2020 outlook.

How Have Estimates Been Moving Since Then?

Estimates review followed a downward path over the past two months. The consensus estimate has shifted -177.78% due to these changes.

VGM Scores

At this time, Avanos Medical has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Avanos Medical has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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