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Here's Why Abiomed Skyrocketed 10.5% Today

By Todd Campbell – Updated Nov 1, 2018 at 5:06PM

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The company's fiscal second-quarter financials sparked optimism on Thursday.

What happened

After the company reported fiscal second-quarter sales and profit that beat Wall Street analysts' forecast on both the top and bottom lines, Abiomed's (ABMD -0.70%) shares surged 10.5% higher on Thursday.

So what

Despite warning last quarter that sales could dip quarter to quarter because of seasonality, the maker of temporary heart pumps reported revenue of $181.8 million that bested last fiscal quarter's $180 million in sales, as well as the industry watchers' outlook for revenue of about $175 million. For comparison, sales were $132.8 million in its second quarter last year.

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In the U.S., Impella heart pump revenue increased 34% to $152.2 million because of a 29% increase in patient use. And outside the U.S., its sales jumped 67% to $23.1 million due to its commercial launch in Japan.

Abiomed also reported GAAP earnings per share of $1.09 that handily outpaced analyst forecasts by $0.36, and non-GAAP income of $0.81 per share, which beat estimates by $0.08. Last year, GAAP EPS totaled $0.54.

The jump in earnings was supported by an increase in operating margin to 27.7% from 23.9% one year ago. Spending on research and development as a percentage of revenue fell 2.1% to 12.5%, while spending on selling, general, and administrative expenses as a percentage of revenue decreased 1.8% to 43.4%.

Now what

The quarter was good enough for management to boost its full-fiscal-year sales outlook to at least $765 million, up 29% year over year, from its prior outlook for sales of at least $755 million. Entering this fiscal year, management was guiding for full-fiscal-year sales of at least $740 million, so Abiomed has boosted the low end of its guidance by $25 million so far this year. 

There's good reason to be optimistic about this company. In September, management reported results from a study showing its heart pumps improve patient outcomes. The fact that Abiomed has only penetrated about 9% of its market opportunity -- and that this data is likely to support greater use of its products -- suggest this company could have a long runway of double-digit growth. 


Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Abiomed. The Motley Fool has a disclosure policy.

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