Abiomed, Inc. ABMD is well-poised for growth in the coming quarters, backed by strength in its Impella product line. The optimism led by robust second-quarter fiscal 2023 performance along with positive tidings on the regulatory front are expected to contribute further. Headwinds from third-party reimbursement and stiff competition persist.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 14.8% against 26.9% decline of the industry and 17.3% fall of the S&P 500 composite.
The renowned global provider of medical products designed to assist or replace the pumping function of the failing heart has a market capitalization of $16.98 billion. The company projects 25% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 15.6% for the past four quarters, on average.
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Let’s delve deeper.
Strength in Impella: Abiomed’s flagship product line, Impella, has continued to be a growth driver, raising our optimism. The company is focused on achieving its Abiomed 2.0 goals, which will drive the rollout of its remote interface technology with SmartAssist and Impella Connect. Abiomed continues to invest in its pipeline of advanced technologies, including the XR Sheath, Impella ECP, Impella Connect, Impella BTR and new AI algorithms.
Regulatory Approvals: Abiomed has been riding on a suite of regulatory approvals of late, which raises our optimism. In October, Abiomed announced that Impella RP Flex with SmartAssist has received the FDA’s pre-market approval (PMA) as safe and effective to treat acute right heart failure for up to 14 days.
The same month, Abiomed announced that the FDA had accepted and closed the post-approval study reports related to the PMA for Impella heart pumps.
Strong Q2 Results: Abiomed’s solid second-quarter fiscal 2023 earnings buoy optimism. The company saw a year-over-year uptick in the top and bottom lines, and continued strength in its global Impella revenues. Abiomed’s robust geographical performance is also encouraging.
Stiff Competition: Abiomed faces competition from other companies offering circulatory care products, which is intense and subject to rapid technological change and evolving industry requirements and standards. It competes with companies that have greater resources and experience than Abiomed. The company’s ability to compete effectively depends upon its ability to distinguish its company and products from its competitors and their products.
Third-Party Reimbursement: Abiomed depends on third-party reimbursement to its customers for market acceptance of its products. Sales of medical devices largely depend on the reimbursement of patients’ medical expenses by government healthcare programs and private health insurers. Without government reimbursement or third-party insurers’ payments for patient care, the market for Abiomed’s products will be limited.
Abiomed is witnessing a negative estimate revision trend for fiscal 2023. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 2.9% south to $4.62.
The Zacks Consensus Estimate for the company’s third-quarter fiscal 2023 revenues is pegged at $293.4 million, suggesting a 12.4% improvement from the year-ago quarter’s reported number.
This compares to our third-quarter fiscal 2023 revenue estimate of $292.6 million, suggesting a 11.6% improvement from the year-ago quarter’s reported number.
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, ShockWave Medical, Inc. SWAV and McKesson Corporation MCK.
AMN Healthcare, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has gained 3.6% against the industry’s 33.1% decline in the past year.
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 23.6% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.
ShockWave Medical has gained 27.9% against the industry’s 26.9% decline over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.
McKesson has gained 62.9% against the industry’s 12.7% decline over the past year.
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