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Here's Why Investors Should Hold AngioDynamics (ANGO) Now

Zacks Equity Research

AngioDynamics Inc. ANGO is gaining prominence in the MedTech space, courtesy of its flagship platform — the NanoKnife System and recent quarterly results. However, the company is currently witnessing sluggishness in the Venous Insufficiency business and PICC product lines.

Shares Up

In a year’s time, this Zacks Rank #3 (Hold) stock has rallied 27.6% outperforming the industry’s 3.2% rally. The current level is also higher than the S&P 500 index’s 6.4% gain.

Here we take a quick look at AngioDynamics’ major headwinds and discuss the factors that ensure near-term recovery.

What’s Deterring the Stock?

In the recently reported fiscal second quarter, AngioDynamics’ Venous Insufficiency business and sales of radiofrequency ablation and PICCs products were soft in the quarter. Notably, the company’s AngioVac product line growth was partially offset in the second quarter due to an anticipated decline in the Venous Insufficiency business. Additionally, Vascular Access unit was hurt by declines in PICC sales.

Why Should You Still Retain the Stock?

AngioDynamics’ major product, NanoKnife, has been constantly boosting its top line. In the second quarter of fiscal 2019, NanoKnife revenues grew 29.1% year over year on increasing global adoption of the technology.

Last year, the NanoKnife System was granted Expedited Access Pathway (EAP) designation by the FDA. It is proposed that the upgraded system will be used for the treatment of Stage III pancreatic cancer.

Reflective of these factors, AngioDynamics has retained its solid guidance for fiscal 2019.

Notably, AngioDynamics continues to expect revenues in the range of $354-$359 million. Adjusted earnings per share are expected between 82 cents and 86 cents.

Free cash flow is projected within $26-$31 million for fiscal 2019.

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Baxter International Inc. Price and Consensus | Baxter International Inc. Quote

Which Way Are Estimates Treading?

The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at 22 cents. The consensus mark for the revenues stands at $88.7 million, reflecting a 5.7% increase year over year.

For fiscal 2019, the Zacks Consensus Estimate for revenues is pegged at $359.1 million, mirroring an increase of 4.3%. For adjusted earnings, the same is pinned at 85 cents, up 14.9% year over year.

Key Picks

A few other top-ranked stocks in the broader medical space are Veeva Systems Inc VEEV, Penumbra, Inc PEN and Becton, Dickinson and Company BDX. While Veeva Systems sport a Zacks Rank #1 (Strong Buy), Penumbra and Becton, Dickinson carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Veeva Systems’ long-term earnings growth rate is projected at 19.5%.

Penumbra has a long-term earnings growth rate of 20%.

Becton, Dickinson’s long-term earnings growth rate is projected at 11.5%.

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