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A month has gone by since the last earnings report for AngioDynamics, Inc. ANGO. Shares have added about 13.9% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is ANGO due for a pullback? 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.
AngioDynamics reported third-quarter fiscal 2018 adjusted earnings of 25 cents per share, which beat the Zacks Consensus Estimate by 25% and improved 31.6% year over year.
Meanwhile, net sales fell almost 2% year over year to $83.9 million, missing the Zacks Consensus Estimate of $86 million.
U.S. net sales in the third quarter of fiscal 2018 were $65.8 million, down 2.8% year over year due to decline in Venous unit, RFA product (radio frequency ablation) and PICCs businesses.
International net sales were $18.1 million, up 0.7% on a year-over-year basis. The upside can be attributed to consistent performance across each of the business units. However, net sales in the segment were partially offset by decline in sales in the company’s discontinued RFA product line in Japan.
Peripheral Vascular (PV) business
Sales in this segment totaled $48.5 million in the reported quarter, down 1% from the year-ago quarter.
Growth in the Fluid and Thrombus Management product lines was offset by declines in the Venous Insufficiency and Angiographic Catheter businesses.
Vascular Access (VA) business
Sales in this segment were $23.3 million, down 2% on a year-over-year basis. The segment witnessed solid sales in BioFlo Midline related products. However, decent growth in the segment was more than offset by declines in PICCs product line.
AngioDynamics witnessed sales of $12.1 million in the third quarter, down 7% year over year. Notably, lower sales related to the discontinued RFA product line hampered growth in the segment. However, mid-teens growth in sales of NanoKnife and the Solero Microwave Tissue Ablation System deserve a mention.
As a percentage of revenues, adjusted gross margin expanded 300 basis points (bps) to 54.2% in the third quarter of fiscal 2018, up from 51.2% in the year-ago quarter. The improvement in gross margin was primarily because of the ongoing operational improvements, recently completed facility consolidations and the expiration of a royalty arrangement in the last quarter of this fiscal year.
Adjusted EBITDAS in the third quarter of fiscal 2018 was $16.8 million compared with $14.9 million in the third quarter of fiscal 2017.
AngioDynamics had a strong cash flow balance in the third quarter. Per management, the company generated $4.3 million in operating cash flow and $3.9 million in free cash flow.
Additionally, AngioDynamics ended the quarter with $53.6 million in cash and cash equivalents and $93.8 million in debt, excluding the impact of deferred financing costs.
AngioDynamics reaffirmed its guidance for fiscal 2018.
For fiscal 2018, the company expects net sales in the range of $345-$350 million. The Zacks Consensus Estimate for fiscal 2018 sales is pegged at $352.3 million.
The company expects adjusted earnings per share in the range of 64-68 cents, excluding any impact from the recently legislated 2017 Tax Reform Act. The Zacks Consensus Estimate for fiscal 2018 adjusted earnings stand at 72 cents. Including the impact of Tax Reform, guidance for adjusted earnings per share is expected in the band of 70-74 cents.
Free cash flow is expected in the range of $30-$35 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
AngioDynamics, Inc. Price and Consensus
AngioDynamics, Inc. Price and Consensus | AngioDynamics, Inc. Quote
At this time, ANGO has an average Growth Score of C. Its Momentum is doing a lot better with an A. The stock was allocated a grade of B on the value side, putting it in the second quintile 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.
Based on our scores, the stock is primarily suitable for momentum investors while also being suitable for those looking for value and to a lesser degree growth.
Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Interestingly, ANGO has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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