Please ensure Javascript is enabled for purposes of website accessibility

Why ABIOMED Shares Are Pumped Up

By Sean Williams - Apr 17, 2013 at 12:51PM

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

ABIOMED shares get a boost following the release of its fourth-quarter preliminary report.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of ABIOMED (ABMD -6.88%), a maker of medical devices for the cardiovascular system, jumped as much as 10% after the company reported better-than-expected preliminary revenue for the fourth-quarter.

So what: In its preliminary fourth-quarter report, ABIOMED is forecasting revenue of $43.7 million, which is noticeably higher than the $41.5 million Wall Street had been projecting for the quarter, and up 17% over the year-ago period. Driving its results was a 22% increase in Impella heart pump sales, which comprise 90% of ABIOMED's revenue stream. The release also notes that the Impella 2.5 was purchased by an additional 30 hospitals during the quarter, and 55 hospitals purchased its new Impella CP device.

Now what: With the Food and Drug Administration off ABIOMED's back, the long-term visibility of its Impella line of heart products is a lot easier to understand. ABIOMED is nowhere near inexpensive at 38 times forward earnings; however, if it can continue to pace its growth around 20% -- and that would entail the introduction of new Impella products every few years -- then I could definitely see some modest upside to its share price, even here.

Craving more input? Start by adding ABIOMED to your free and personalized watchlist so you can keep up on the latest news with the company.

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
ABIOMED, Inc.
ABMD
$240.46 (-6.88%) $-17.77

*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 service.

Stock Advisor Returns
349%
 
S&P 500 Returns
122%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/19/2022.

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.