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Cardiovascular Systems Gains on Global Growth & Innovation

Zacks Equity Research

On Mar 11, we issued an updated research report on Cardiovascular Systems, Inc. CSII. The company has been pursuing product improvements and evaluating new technologies to strengthen and broaden its portfolio of powerful micro invasive tools. However, the company facing cut-throat competition is a concern. The stock currently carries a Zacks Rank #2 (Buy).

Over the past three months, shares of Cardiovascular Systems have outperformed its industry. The stock has surged 47% compared with the industry’s 11.3% rise.

Cardiovascular Systems exited second-quarter fiscal 2019 with an earnings beat and in-line revenues. The company witnessed a year-over-year increase in the Coronary and peripheral device segments. It continued to see higher revenues from Atherectomy franchises, growing international sales of OAS (Orbital Atherectomy System) and top-line contributions from the emerging product pipeline.

We are also upbeat about the company’s recent announcement of the first global use of Diamondback 360 Coronary OAS in UAE. Further, the company is progressing on the back of the international distribution agreement with OrbusNeich to sell its coronary and peripheral OAS outside the United States and Japan.

The company expects product launches to account for at least 10% of its core business growth in the second half of the full fiscal. These introductions include the Teleport microcatheter, the coronary ViperWire Advance FlexTip, consistent expansion of the peripheral radial device along with the new ViperCath Radial Exchange Catheter and ViperWire FlexTip launches in the fiscal third quarter. The company is also planning the launch of peripheral exchangeable with GlideAssist later in the current fiscal year.

Moreover, Cardiovascular Systems intends to introduce the ViperWire Advance FlexTip to physicians across the United States in the fiscal third quarter.
Management also informed about submitting its 510(k) application to the FDA for the exchangeable peripheral platform, which is scheduled to be unveiled in late fiscal 2019.

Of late, Cardiovascular Systems has been firing on all cylinders to expand its geographical presence. To this end, the company steadily develops a scalable medical education infrastructure. By the end of the ongoing fiscal year, the company expects to complete training around 50 international physicians on the use of OAS. Notably, it has already trained more than 50 physicians internationally.

On the flip side, the company faces acute competition in the niche space. Further, its failure to enter the global markets might affect results.

Other Key Picks

A few other top-ranked stocks in the broader medical space are ABIOMED, Inc., ABMD, Varian Medical Systems, Inc. VAR and Masimo, Inc. MASI, each currently carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ABIOMED’s long-term earnings growth rate is expected at 27.67%.

Varian’s long-term earnings growth rate is projected at 8.00%.

Masimo’s long-term earnings are projected to grow 15.60%.

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