U.S. markets closed

Surmodics (SRDX) Q1 Earnings Beat Estimates, Revenues Miss

Zacks Equity Research

Surmodics, Inc. SRDX reported adjusted earnings per share (EPS) of 5 cents in first-quarter fiscal 2020, which beat the Zacks Consensus Estimate of a loss of 3 cents. However, the bottom line plunged 58.3% from the year-ago quarter.

On a GAAP (reported) basis EPS came in at 1 cent compared with 9 cents in the prior-year quarter.

Revenues in the quarter improved 1.7% year over year to $22.6 million. However, the figure missed the Zacks Consensus Estimate by 0.9%.

Fiscal Q1 Highlights

In the quarter under review, Product sales were $9.9 million, up 2.3% from the prior-year quarter. Royalty and license fee revenues totaled $10.1 million, up 0.5% from the prior-year quarter. Research, development and other were $2.5 million, up 4.2% year over year.

In the reported quarter, Surmodics announced partnership with Medtronic with respect to distribution of Telemark coronary support catheter.

Surmodics, Inc. Price, Consensus and EPS Surprise

 

Surmodics, Inc. Price, Consensus and EPS Surprise

Surmodics, Inc. price-consensus-eps-surprise-chart | Surmodics, Inc. Quote

Segmental Analysis

Medical Device

In the reported quarter, sales at the segment rose 0.8% to $17.4 million, including $1.3 million from the SurVeil agreement with Abbott, compared with $2.4 million in the year-ago quarter. The Medical Device business unit reported an operating loss of $0.4 million in the fiscal first quarter against an operating income of $0.4 million in the year-ago quarter.

In Vitro Diagnostics

In the quarter under review, sales improved 4.6% to $5.2 million. Operating income at the segment was $2.6 million in the reported quarter, up 5.9% from the prior-year quarter.

Operational Details

The company’s research and development costs totaled $12.1 million, up 5.7% year over year.

Selling, general and administrative expenditures were almost $6.9 million, up 16.7% from the prior-year quarter.

Total operating costs and expenses in the quarter were $22.9 million, up 6.3% year over year. The company reported adjusted operating income of $0.3 million, which plunged 74.4% from the year-ago quarter.

Fiscal 2020 Guidance Reiterated

Surmodics continues to expect revenues to range between $87 million and $91 million. The Zacks Consensus Estimate for the metric is pegged at $89.4 million, within the guided range.

Adjusted loss per share is projected between 14 cents and 44 cents.

Our Take

Surmodics exited the fiscal first quarter on a mixed note, wherein the earnings beat the consensus mark, while revenues missed the same. The company continues to gain from its core units – Medical Devices and In Vitro Diagnostics. Management is also upbeat about the partnership with Medtronic with respect to distribution of Telemark coronary support catheter. Strong revenue guidance for fiscal 2020 instills investor optimism in the stock.

Nevertheless, surging operating expenses remains a concern.

Zacks Rank

Currently, Surmodics carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks which reported solid results this earning season are Stryker Corporation SYK, Accuray Incorporated ARAY and AmerisourceBergen Corporation ABC. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Fourth-quarter reported revenues of $4.13 billion surpassed the Zacks Consensus Estimate by 0.7%. The company carries a Zacks Rank #2 (Buy).

Accuray reported second-quarter fiscal 2020 adjusted EPS of a penny, improving from the Zacks Consensus Estimate of a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank #1.

AmerisourceBergen reported first-quarter fiscal 2020 adjusted EPS of $1.76, which beat the Zacks Consensus Estimate of $1.67 by 5.4%. The company has an expected long-term earnings growth rate of 7.4%. AmerisourceBergen carries a Zacks Rank of 2.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Accuray Incorporated (ARAY) : Free Stock Analysis Report
 
Stryker Corporation (SYK) : Free Stock Analysis Report
 
Surmodics, Inc. (SRDX) : Free Stock Analysis Report
 
AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.