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Why Is Abiomed (ABMD) Down 5.8% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Abiomed (ABMD). Shares have lost about 5.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Abiomed due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

ABIOMED Q1 Earnings Beat Estimates, FY20 Guidance Slashed

ABIOMED reported first-quarter fiscal 2020 earnings per share (EPS) of $1, which beat the Zacks Consensus Estimate by a penny. The figure rose 28.2% year over year.

The company’s revenues came in at $207.7 million, missing the Zacks Consensus Estimate of $210.6 million. However, the metric improved 15.4% from the prior-year quarter.

Fiscal Q1 in Detail

Worldwide Impella heart pump revenues in the reported quarter totaled $199.9 million, reflecting an increase of 15% year over year.

U.S. Impella product revenues totaled $168.3 million, an increase of 11% year over year. Per management, U.S. patient usage of the Impella heart pumps rose 13% in the quarter.

Outside the United States, Impella product revenues totaled $31.5 million, highlighting an increase of 44% year over year. Japan revenues were $8.5 million in the quarter, up a substantial 227% year over year.

Margin Trend

In the quarter under review, gross profit totaled $170.6 million, up 14.4% year over year. Gross margin in the quarter was 82.1% of net revenues, down 80 basis points (bps) year over year. Research & Development (R&D) costs grossed $23.8 million, up 11.8% year over year.

Operating income totaled $60.7 million, up 30% on a year-over-year basis. Operating margin was 29.2%, up 320 bps.

Financial Condition

ABIOMED’s balance sheet remains debt free. The company ended the fiscal first quarter with $526.7 million of cash and marketable securities.

Guidance

For fiscal 2020, ABIOMED expects total revenues in the range of $885-$925 million, an increase of 15% to 20% year over year. This range is below the earlier provided guidance range of $900-$945 million, calling for a year-over-year increase of 17-23%.

How Have Estimates Been Moving Since Then?

Estimates revision followed a downward path over the past two months. The consensus estimate has shifted -7.62% due to these changes.

VGM Scores

At this time, Abiomed has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Abiomed has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.



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