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Here's Why You Should Retain Abiomed (ABMD) Stock for Now

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Abiomed, Inc. ABMD is well poised for growth in the coming quarters, backed by strength in its Impella product line. A robust second-quarter fiscal 2022 performance, along with the company’s solid global foothold, is expected to contribute further. Stiff competition and third-party reimbursement concerns persist.

Over the past year, this Zacks Rank #3 (Hold) stock has gained 10.6% compared with 3.9% growth of the industry and 23.4% rise of the S&P 500.

The renowned global provider of medical products designed to assist or replace the pumping function of the failing heart has a market capitalization of $13.68 billion. The company projects 20% growth for the next five years and expects to maintain its strong performance. It has delivered an earnings surprise of 5.84% for the past four quarters, on average.

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Zacks Investment Research

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Let’s delve deeper.

Strength in Impella: Abiomed’s flagship product line, Impella, has continued to be a growth driver, which raises our optimism. Abiomed expanded its Breethe OXY-1 System to a total of seven U.S. sites and has treated 53 patients, thus concluding Phase II of its pilot site product launch.

Further, the Impella Connect software has come live at more than 85% of the company’s U.S. sites, allowing for most U.S. patients on support to be monitored in the cloud by the field. Management also confirmed during the fiscal 2022 second-quarter earnings that the Impella 5.0 has been placed in 666 sites, the Impella RP is in 634 sites and the Impella 5.5 with SmartAssist is now available in 306 sites.

Solid Global Foothold: The Impella support has already been integrated into hospitals throughout Germany and Japan. It has been used to treat patients in Hong Kong, Australia, Singapore, Israel, and most recently, in India. European revenues surged year over year on the back of higher patient utilization, sales mix and timing of orders. Revenues from the Japan business were up year over year on the back of a surge in patient utilization. Also, the company’s Impella Connect software is currently live at 14% of the European sites.

Strong Q2 Results: Abiomed’s solid second-quarter fiscal 2022 earnings buoy optimism. The company saw strength in its global Impella revenues, which is impressive. Abiomed’s receipt of FDA clearances for its Impella products looks encouraging. Abiomed’s June buyout of the remaining interest of preCARDIA also raises our optimism on the stock. Expansion of gross margin bodes well for the stock.

Downsides

Forex Woes: 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.

Stiff Competition: Abiomed faces competition from other companies offering circulatory care products. The market where it operates is intense and subject to rapid technological change, and evolving industry requirements and standards. Abiomed competes with companies that have greater financial, product development, sales and marketing resources, and experience. The company’s ability to compete effectively depends on distinguishing itself and its products from its competitors and their products.

Estimate Trend

Abiomed is witnessing a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.2% south to $4.23.

The Zacks Consensus Estimate for the company’s third-quarter fiscal 2022 revenues is pegged at $251.1 million, suggesting an 8.4% improvement from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Chemed Corporation CHE, Thermo Fisher Scientific Inc. TMO and AMN Healthcare Services AMN.

Chemed, carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted earnings per share (EPS) of $5.06, which beat the Zacks Consensus Estimate by 13.5%. Revenues of $538.7 million outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chemed has an estimated long-term growth rate of 7.7%. The company surpassed estimates in the trailing four quarters, the average surprise being 5.59%.

Thermo Fisher reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Third-quarter revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently carries a Zacks Rank #2.

Thermo Fisher has an estimated long-term growth rate of 14%. The company surpassed estimates in the trailing four quarters, the average surprise being 9.02%.

AMN Healthcare reported third-quarter 2021 adjusted EPS of $1.73, which surpassed the Zacks Consensus Estimate by 29.1%. Third-quarter revenues of $877.8 million outpaced the Zacks Consensus Estimate by 12.3%. It currently sports a Zacks Rank #1.

AMN Healthcare has an estimated long-term growth rate of 16.2%. The company surpassed estimates in the trailing four quarters, the average surprise being 19.51%.


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ABIOMED, Inc. (ABMD) : Free Stock Analysis Report

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Chemed Corporation (CHE) : Free Stock Analysis Report

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