Cardiovascular Systems (CSII) Up 2.3% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Cardiovascular Systems, Inc. CSII. Shares have added about 2.3% 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.
Cardiovascular Systems Swings to Earnings in Q3
Cardiovascular Systems reported adjusted earnings per share of $0.03 in third-quarter fiscal 2017, reflecting a massive improvement from the year-ago quarter’s adjusted loss of $0.47. The quarter’s number compared favorably with the Zacks Consensus Estimate of a loss of $0.04.
The year-over-year improvement was primarily backed by revenue growth and lower operating expenses on account of the company’s cost realignment actions.
Quarter in Details
Cardiovascular Systems posted revenues of $52.1 million in the fiscal third quarter, marking a year-over-year increase of 17.3%. The figure surpassed the Zacks Consensus Estimate of $51 million.
Per management, the strong top-line performance exhibited the company’s efforts to stabilize and support its field sales representatives.
During the reported quarter, Cardiovascular Systems sold over 15,700 devices, which generated 92% of revenues. The company added 37 new peripheral accounts and 35 coronary accounts.
Coronary device revenues improved 28% year over year to $13.5 million and peripheral device revenues rose 14% to $38.7 million.
Margin
Gross margin in the reported quarter was 78.6%, down 174 basis points (bps) year over year, primarily on account of a 27.6% rise in cost of goods sold.
Meanwhile, selling and administrative (SG&A) expenses contracted 11.8% to $37.3 million and research and development (R&D) expenses fell 5.5% to $5.4 million. The resultant adjusted operating expenses declined 11.1% to $42.7 million, primarily exhibiting management’s cost realignment initiatives and timing of studies and projects. Consequently, operating loss narrowed to a loss of $1.7 million from a loss of $12.3 million a year ago.
Financial position
The company exited the third quarter of fiscal 2017 with cash and cash equivalents of $103.1 million, compared with $79.2 million at the end of second-quarter 2017.
Outlook
Cardiovascular Systems issued its fourth-quarter fiscal 2017 guidance. The company expects revenues in the range of $51.5–$52.5 million. The current Zacks Consensus Estimate for fourth-quarter fiscal 2017 revenues is pegged at $52.8 million, slightly above the company’s guidance.
Moreover, the company expects gross profit to account for 81% of revenues, while operating expenses are estimated at around $43.5 million.
The company expects to incur net loss of $2.0–$1.4 million or loss per share of $0.06–$0.04 in the fourth quarter. The current Zacks Consensus Estimate is pegged at a loss of $0.02, narrower than the company’s guided range.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Cardiovascular Systems, Inc. Price and Consensus
Cardiovascular Systems, Inc. Price and Consensus | Cardiovascular Systems, Inc. Quote
VGM Scores
At this time, Cardiovascular Systems' 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 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth investors based on our style scores.
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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