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Why Is Cardiovascular Systems (CSII) Up 0.9% Since Last Earnings Report?

Zacks Equity Research
Economic & Earnings Data To Watch For

A month has gone by since the last earnings report for Cardiovascular Systems (CSII). Shares have added about 0.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cardiovascular Systems 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 drivers.

Recent Earnings

Cardiovascular Systems reported earnings per share (EPS) of 11 cents in fourth-quarter fiscal 2018 compared with the year-ago 2 cents.

The figure came in higher than the guided range of 5 cents to 8 cents. Moreover, the EPS figure trumped the Zacks Consensus Estimate of 6 cents.

Full-year adjusted EPS came in at 5 cents, comparing favorably with the year-ago loss of 6 cents. Also, the figure beat the Zacks Consensus Estimate of a breakeven.

Net Sales

Cardiovascular Systems recorded revenues of $59.2 million in the fiscal fourth quarter, marking an 11.9% year-over-year increase. Also, the metric was above the guided range of $57.5-$59 million. The top line steered past the Zacks Consensus Estimate of $58.4 million.

Fiscal 2018 revenues of $217 million were up 5.9% from the year-ago figure. Also, revenues outpaced the Zacks Consensus Estimate of $216.4 million.

Segment Details

Coronary device revenues increased 22% year over year to $16.1 million. Meanwhile, peripheral device revenues rose 8.3% to $43.1 million on a year-over-year basis. The company continued to see strength in its orbital atherectomy systems which were used in the treatment of over 67,000 patients in fiscal 2018.

Margin

Gross margin in the reported quarter was 81.6%, down 10 basis points (bps) year over year.

Meanwhile, selling and administrative (SG&A) expenses rose 5.3% to $37.8 million while research and development (R&D) expenses were up 6.3% to $6.7 million. As a result, adjusted operating expenses expanded 5.7% to $44.6 million.

Operating income was around $3.8 million compared with operating income of $1 million in the year-ago quarter. Further, operating margin came in at 6.4%, up 450 bps from the year-ago figure.

Financial position

The company exited fiscal 2018 with cash and cash equivalents of $116.3 million, compared with $107.9 million at the end of fiscal 2017.

Outlook

Cardiovascular Systems issued its fiscal 2019 guidance. The company expects revenues in the range of $240-$250 million for fiscal 2019. The current Zacks Consensus Estimate for fiscal 2019 revenues is pegged at $240.2 million, near the low end of the company's guidance.

Moreover, the company expects gross profit to account for 80% of revenues in fiscal 2019.

The company expects to incur net loss of 1-2% of revenues in fiscal 2019. The current Zacks Consensus Estimate for earnings is pegged at 12 cents.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -713.33% due to these changes.

VGM Scores

At this time, Cardiovascular Systems has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our style scores.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cardiovascular Systems has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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