Here's Why You Should Invest in Penumbra (PEN) Stock for Now
Penumbra, Inc. PEN is gaining from the continued demand for its products. Strong uptake following the launch of Lightning Flash accelerates top-line growth. Penumbra’s Immersive Healthcare business too is making significant progress.
In the past year, the Zacks Rank #1(Strong Buy) stock has gained 56.9% against the the industry’s 4.5% fall and the S&P 500’s 3.8% rise.
The global healthcare provider company has a market capitalization of $9.75 billion. The company projects a 25.2% growth for 2023. It surpassed estimates in the trailing four quarters, the average surprise being 94.2%.
Key Growth Catalysts
Robust Vascular Business Growth: Penumbra’s Vascular business is gaining traction, driven by worldwide growth. In the second quarter, the revenues were up 23.6% reportedly and 23.7% at CER from the prior-year level. There was 50% year-over-year growth in U.S. thrombectomy. Further, the commercial execution of the company’s strategy for Lightning Flash and Lightning Bolt 7 is incredible. The company’s plan to reach most of the 800,000 annual venous and arterial patients in the United States over the next five-plus years looks impressive.
Global Expansion Continues: In the second quarter of 2023, Penumbra’s international revenues registered 28.6% growth. Internationally, the company is witnessing early success with its first-generation computer-aided product launch in Europe. It has plans to expand access to the most advanced thrombectomy products to the international vascular teams over the next few years.
In addition, Penumbra’s international teams and partners also see enormous potential to further expand its leadership in stroke intervention outside the United States with SENDit and Thunderbolt over the coming years.
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The company expects global revenues to grow in the range of 23-25% in the third quarter on a year-over-year basis, accelerating to 30% cost growth in the fourth quarter.
Improving Neuro Trend: Within the Neuro franchise, Penumbra is witnessing an acceleration in the company’s stroke business. It is seeing a strong customer uptake of RED 72 (with the proprietary SENDit technology), RED 43 and BMX81. These products represent significant advances in both the trackability of 0.072-sized aspiration catheters as well as distal clot removal. According to Penumbra, coupled with the recently launched BMX81, these products will continue to increase the company’s growth and market share in Neuro, particularly as physicians continue to realize the trade-off with oversized aspiration catheters in the market in the past several years.
In the second quarter 2023, the revenues were up 23.8% year-over-year driven by new products in the United States, Europe and Asia Pacific.
Raised Guidance: Penumbra expects net sales in the range of $1.05-$1.07 billion, implying a 24-26% improvement year over year. Previously, PEN anticipated sales to be in the band of $1.04-$1.06 billion for 2023. It expects the vascular business to grow slightly above the 24-26% range and the neuro business to remain below this guidance.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for its fiscal 2023 earnings has moved 12.2% of $1.75.
The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $1.06 billion, suggesting a 25.2% rise from the year-ago reported number.
Key Picks
Some other top-ranked stocks in the broader medical space are Elevance Health, Inc. ELV, Integer Holdings Corporation ITGR and Patterson Companies, Inc. PDCO.
Elevance Health reported second-quarter 2023 adjusted earnings per share (EPS) of $9.04, beating the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Elevance Health has a long-term estimated growth rate of 12.1%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 2.8%.
Integer Holdings reported second-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 15.2%. Revenues of $400 million surpassed the Zacks Consensus Estimate by 8.9%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 12.1%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 8.4%.
Patterson Companies has an Earnings ESP of +5.66% and a Zacks Rank of 1. PDCO has an estimated long-term growth rate of 9.2%.
Patterson Companies’ earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 4.5%.
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