Please ensure Javascript is enabled for purposes of website accessibility

Abiomed Crushed Its Earnings Estimates, but the Market Wasn't Impressed

By Taylor Carmichael - Updated Feb 6, 2020 at 2:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The medical device maker's stock dropped 9%, then recovered.

On Thursday, Abiomed (ABMD -0.82%) announced its results for its third quarter, delivering a major beat on its bottom-line estimates. The market was expecting $1.09 a share in earnings, but got $1.51 a share instead. Profits were up 57% from a year ago. 

However, Wall Street was apparently unhappy about the revenue number. The company's original forecast for the quarter was $226.7 million in sales, but it revised that estimate downward on Jan. 13, to $222 million. On Thursday, it reported revenues of $221.6 million. The stock immediately dropped 9% on the news. However, buyers rushed in and drove the stock price back up. As of 1:45 p.m. EST, shares were only trading about 0.5% lower for the day. 

stock market roller coaster

Image Source: Getty Images

What caused the miss?

Abiomed had a rough 2019. First, the maker of temporary heart pumps took a hit when the Food and Drug Administration sent a letter to doctors in February warning about the company's lead product, the Impella. The FDA suggested that patients treated with the Impella had a higher mortality rate than had been observed in the pre-approval clinical studies. The FDA sent out an updated letter in May, saying the device was safe and effective if used for appropriately selected patients.

Then in November, some researchers said they had found that Impella is "associated with an increased risk of death, bleeding, and stroke among patients undergoing angioplasty," and concluded that using an intra-aortic balloon to support blood flow was safer. Abiomed responded that its devices are both safe and effective, and the company had actual clinical trial results that backed up that assertion.

However, these reports have been dragging down the stock. Abiomed's shares are down 45% over the last 52 weeks.  And they might be affecting sales as well. The company blamed its downward revision on the study published last year. Nonetheless, sales still grew 10% last quarter.

Taylor Carmichael has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Abiomed. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ABIOMED, Inc. Stock Quote
$290.93 (-0.82%) $-2.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.