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Cardiovascular Systems (CSII) Up 2% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Cardiovascular Systems, Inc. CSII. Shares have added about 2% in that time frame.

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

Recent Earnings

Cardiovascular Systems reported adjusted loss per share of a penny in second-quarter fiscal 2018, against the year-ago quarter’s adjusted earnings of 3 cents.

The figure was narrower than the earlier guided range of loss per share of 6-3 cents. The figure also compared favorably with the Zacks Consensus Estimate of a loss of 4 cents.

Net Sales

Cardiovascular Systems recorded revenues of $52.6 million in the fiscal second quarter, marking a year-over-year increase of 5.1%. Also, the figure was within the guided range of $52.5-$54 million. However, revenues missed the Zacks Consensus Estimate of $53.3 million.

Segment Details

Coronary device revenues increased 3.5% year over year to $13.4 million. To date, Cardiovascular Systems has sold over 3,56,000 devices to leading institutions in the United States

Meanwhile, peripheral device revenues rose 5.8% to $39.2 million on a year-over-year basis. The company added 29 new peripheral accounts and 30 coronary accounts in the fiscal second quarter.

Margin

Gross margin in the reported quarter was 81.9%, up 20 basis points (bps) year over year.

Meanwhile, selling and administrative (SG&A) expenses contracted 8.9% to $37 million and research and development (R&D) expenses were up 10.2% to $6.4 million. Resultantly, adjusted operating expenses were up 9.1% to $43.4 million.

Per management, operating expenses were lower than the earlier provided guidance due to reduced incentive compensation and payroll expenses. Operating loss was around $0.3 million, against operating income of $1.1 million in the year-ago quarter.

Financial position

The company exited the second quarter of fiscal 2018 with cash and cash equivalents of $107.3 million, compared with $104.7 million at the end of preceding quarter. The company has no long term debt.

Outlook

Cardiovascular Systems updated its fiscal 2018 revenue guidance to the range of $215-$219 million, down from $226-$233 million. The current Zacks Consensus Estimate for fiscal 2018 revenues is pegged at $225.3 million, below the company’s guided range.

The company expects revenues in the range of $55-$56.5 million for third-quarter fiscal 2018. The current Zacks Consensus Estimate is pegged at $59.5 million, above the company’s guided range.

Moreover, the company expects gross profit to account for 81% of revenues, while operating expenses are estimated at around $45.5 million for third-quarter fiscal 2018.

The company expects to incur net loss of $0.9 million to $0.0 million. Adjusted earnings per share is expected to be between negative 3 cents and breakeven. The current Zacks Consensus Estimate is pegged earnings at 3 cents, above the company’s guided range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter.

Cardiovascular Systems, Inc. Price and Consensus

 

Cardiovascular Systems, Inc. Price and Consensus | Cardiovascular Systems, Inc. Quote

VGM Scores

At this time, CSII has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. 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 D. 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

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, CSII has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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