Here's Why You Should Invest in Penumbra (PEN) Stock Now
Penumbra, Inc. PEN is gaining as vascular and neuro businesses are showcasing encouraging growth trends. The Immersive Healthcare business is making significant progress as well. Yet, currency movements and a challenging competitive landscape affect the top line.
Year-to-date, the Zacks Rank #2 (Buy) stock has gained 11.2% compared with the industry’s 1.7% rise and the S&P 500’s 23.4% rise.
The global healthcare provider company has a market capitalization of $9.55 billion. It surpassed estimates in the trailing four quarters, the average surprise being 56.7%.
Key Growth Catalysts
Robust Vascular Business Growth: Penumbra is demonstrating strong growth within the Vascular business, banking on the rapid increase in sales of the company’s vascular thrombectomy products in the United States. In this region, the company is benefiting from sales of new products and further market penetration of existing products. Added to this, the company successfully launched the Lightning Bolt 7 arterial thrombectomy system in June following its FDA clearance in March 2023. Lightning Flash and Lightning Bolt are also accelerating Penumbra’s U.S. vascular thrombectomy franchise, up 42% year over year in the third quarter. The company expects to see a robust growth trajectory in the Vascular arm in the next five years and beyond.
Improving Neuro Trend: Within the Neuro franchise, Penumbra is witnessing an acceleration in the company’s stroke business. According to Penumbra, these products and the recently launched BMX81 will continue to increase the company’s growth and market share in Neuro as physicians continue to realize the trade-off with oversized aspiration catheters in the market in the past several years.
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In the third quarter, a strong increase in the company’s Neuro product sales was driven by an increase in sales of neuro thrombectomy products and neuro access products.
Stable Solvency Structure: Penumbra exited the third quarter of 2023 with cash and cash equivalents of $249 million compared with $221 million at the end of the second quarter of 2023. Total debt was $24 million, much lower than the corresponding cash and cash equivalent level. Also, it has no short-term-payable debt on its balance sheet. This is good news in terms of the company’s solvency position, particularly during a global inflationary situation and supply halt issues.
At the end of the third quarter of 2023, total debt-to-capital was low at 2.1%. This compares to 2.2% in the second quarter. The industry’s debt-to-capital ratio of 30.8% stands significantly higher than that of the company.
Downsides
Foreign Exchange Impacts Sales: A significant portion of Penumbra’s sales and costs are exposed to changes in foreign exchange rates. In 2022, approximately 30.2% of the company's consolidated revenues came from the non-U.S. markets. The company’s operations use multiple foreign currencies, including the euro and Japanese yen. Changes in those currencies relative to the U.S. dollar will impact sales, cost of sales and expenses, and, consequently, net income.
Tough Competitive Landscape: The medical device industry is intensely competitive, subject to rapid change and affected by new product introductions and other market activities of industry participants. Penumbra competes with a number of manufacturers and distributors of neuro and vascular medical devices.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for its fiscal 2023 earnings has moved up 17.2% to $2.04.
The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $1.06 billion, indicating a 25.3% rise from the year-ago reported number.
Key Picks
Some other top-ranked stocks in the broader medical space are Haemonetics HAE, Insulet PODD and DexCom DXCM. While Haemonetics and DexCom each carry a Zacks Rank #2, Insulet sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ stock has risen 11.6% in the past year. Earnings estimates for Haemonetics have increased from $3.82 to $3.86 in 2023 and $4.07 to $4.11 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for Insulet’s 2023 earnings per share have increased from $1.61 to $1.90 in the past 30 days.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.23 to $1.41 in the past 30 days. Shares of the company have increased 8.9% in the past year compared with the industry’s rise of 1.7%.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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Haemonetics Corporation (HAE) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
Penumbra, Inc. (PEN) : Free Stock Analysis Report
