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Bear of the Day: Silk Road Medical (SILK)

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Since I wrote about Penumbra (PEN) for the Bull of the Day -- a prime innovator in the treatment of stroke with catheter-based technology -- I couldn't resist choosing the following Zacks #5 Rank for my Bear of the Day.

Silk Road Medical (SILK) is a $1.8 billion medical device company focused on reducing the risk of stroke and its devastating impact, in particular during surgical procedures. The company has pioneered a new approach for the treatment of carotid artery disease called TransCarotid Artery Revascularization (TCAR).

TCAR is a clinically proven procedure combining surgical principles of neuroprotection with minimally invasive endovascular techniques to treat blockages in the carotid artery at risk of causing a stroke. Silk Road Medical is based in Sunnyvale, California.

Silk Road Medical reported quarterly results last week and announced a loss of $0.49 per share versus the Zacks Consensus Estimate of a loss of $0.30. This compares to loss of $0.27 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -63.33%. A quarter ago, it was expected that this medical device maker would post a loss of $0.28 per share when it actually produced a loss of $0.31, delivering a surprise of -10.71%.

Over the last four quarters, the company has surpassed consensus EPS estimates just once.

Silk Road Medical posted revenues of $21.13 million for the quarter ended December 2020, missing the Zacks Consensus Estimate by just 0.5%. This compares to year-ago revenues of $18.63 million. The company has topped consensus revenue estimates three times over the last four quarters.

Since that report, the 2021 EPS consensus among 5 covering analysts has dropped from a loss of 75-cents to a loss of $1.44. And next year fell from a loss of 16-cents to a loss of $1.07.

Young, Innovative and Growing Fast

While the company's science appears exciting and promsing on the surface, investors are keenly focused on the growth rates. This year's consensus revenue projection is for a first breach of the $100 million mark, represening over 40% growth.

And next year is currently pegged at $144M, for a 37% advance.

This kind of sales growth -- even absent profit growth -- probably justifies the valuation as the company trades for nearly 20X forward sales estimates.

While I like Silk Road Medical's apparent expertise and growth thus far, I must admit I haven't done a lot of research here since I just discovered the company this week.

It will be a young Med-Tech company I plan to keep an eye on, especially when the estimates turn back north. The Zacks Rank will let us know.

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