Why Shares of Abiomed Rose 18.4% in July

What happened

Abiomed (ABMD), a maker of medical devices that provide circulatory support, including the Impella heart pumps used in cardiac surgery, saw its shares climb 18.4% in July, according to data from S&P Global Intelligence. Abiomed's shares closed at $247.51 on June 30, the last trading day of that month. It saw a high of $293.74 on July 29, the final trading day of last month, before closing the month at $293.01. The stock has a 52-week low of $219.85 and a 52-week high of $379.30, and is down more than 18% so far this year.

What happened

No big news pushed the stock. Instead, the stock has steadily recovered from its low this year of $224 in late June. The company's shares had fallen as the market, concerned by inflation and a rising dollar, had cooled on many growth stocks. Abiomed's price-to-earnings ratio of 97.05 may be considered high by some, but that's misleading because of its continued growth. Abiomed's quarterly revenue has climbed 108.7% over the past five years, and its recent quarterly reports show that trend isn't slowing.

The company was coming off a strong fiscal 2022 fourth-quarter earnings report with revenue of $269.9 million, up 6.1% year over year, and net income of $60.3 million, or $1.31 per share, up from $1.24 in the same period in 2021. On Thursday, Abiomed reported 2023 first-quarter revenue of $277.1 million, up 10% year over year and 2% sequentially. Abiomed also listed Q1 net income of $54.6 million, or $1.19 in earnings per share (EPS), compared to a loss of $26,5 million, or an EPS loss of $0.59 in the same period last year but down 9% from the previous quarter.

The company said it expects full-year revenue between $1.13 billion to $1.17 billion, representing an increase of 10% to 14% compared to fiscal year 2022.

Now what

The company's ultra-small Impella heart pump is expected to be in demand because the incidence of heart failure is expected to increase due to rising senior populations and the rise of obesity. One study by Research and Markets puts the compound annual growth rate for the global heart pump market at 15.16% through 2027, reaching a $6.35 billion market at that time.

The company's Impella pumps provide a nice moat because they were the first of their kind to be approved by the Food and Drug Administration back in 2008, and it has the research and development money that allows it to continue to improve its devices.