Here's Why You Should Add Surmodics to Your Portfolio Now
Surmodics, Inc. SRDX is gaining on regulatory clearances and acquisitions. Consistent R&D efforts have also been a key growth driver.
The company, with a market capitalization of $584.6 million, is a leading provider of medical device and In Vitro Diagnostics (IVD) technologies to the healthcare industry. The company’s earnings are expected to improve 10% over the next five years. Also, this Zacks Rank #1 (Strong Buy) company has a trailing four-quarter positive earnings surprise of 163.1%, on average.
In the past three months, the stock has gained 22.4% compared with the 12.8% growth of its industry.
Let’s delve deeper into the factors working in favor of the company.
Consistent Efforts to Boost R&D: Surmodics’ solid efforts to improve research and development have been a key growth driver. Its whole product solutions pipeline and Sirolimus-based below-the-knee DCB program deserve a mention here. Surmodics has been making progress with its internally-developed .014 balloon platform. During fiscal 2020, the company expects to initiate a first-in-human clinical study for its Sundance below-the-knee sirolimus drug-coated balloon and advance development efforts on several products, including those related to its POUNCE thrombectomy and Sublime radial access platforms. Moreover, the company continues to make significant progress when it comes to its other radial access therapeutic devices, including the 0.18 transradial PTA balloon catheter.
Regulatory Approvals: During first-quarter fiscal 2020, the company’s Sirolimus-coated balloon, Sundance, was granted breakthrough device designation by the FDA. The company’s radial artery access and thrombectomy platforms have also been showing good progress. The company is committed toward accelerating the development of these platforms and expects to submit at least three new devices for 510(k) clearance during fiscal 2020.
Moreover, the company continues to target regulatory clearance for POUNCE by late third-quarter fiscal 2020. It made an active submission for the 510(k) FDA clearance during the fiscal second quarter. Additionally, the company expects to secure 510(k) clearance for its 2.5 meter Sublime .014" transradial PTA balloon catheter by third-quarter fiscal 2020.
In the fiscal second quarter, the company attained CE mark clearance for Telemark coronary/peripheral support microcatheter. It continues to progress with its radial platform and has filed for FDA approval for its .014” radial balloon catheter. These balloon catheters, which will be launched in the United States later this year, can be used to help patients suffering from below-the-knee critical limbischemia.
Acquisitions and Partnerships: Surmodics has made several acquisitions over the last few years, which have not only diversified its revenue base but also expanded its customer base.Management is upbeat about the recently-inked partnership with Cook Medical for commercialization of .014” and .018” low-profile PTA balloon catheters.
These deals have bolstered Surmodics’ capability to support key projects and strengthened the technical and business management teams.
Estimates Trend
The company is witnessing a positive estimate revision trend for fiscal 2020 earnings. Over the past 30 days, the Zacks Consensus Estimate for the same has risen to 20 cents per share from 5 cents per share.
The Zacks Consensus Estimate for third-quarter fiscal 2020 revenues is pegged at $24.8 million, suggesting a 1.9% rise from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks from the broader medical space include Laboratory Corporation of America Holdings LH, Accuray ARAY and Quest Diagnostics DGX.
LabCorp’s long-term earnings growth rate is estimated at 6.1%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Accuray’searnings growth rate for the fiscal fourth quarter is estimated at 81.8%. The company presently carries a Zacks Rank #2.
Quest Diagnostics’ long-term earnings growth rate is estimated at 7.6%. It currently carries a Zacks Rank #2.
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Accuray Incorporated (ARAY) : Free Stock Analysis Report
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