Source: Abiomed
What: After reporting fiscal first quarter financial results that topped analyst estimates, shares in Abiomed (ABMD) jumped by 15% earlier today.
So what: The medical device manufacturer reports that its fiscal first quarter revenue grew 50.4% year-over-year to $73.4 million and that its EPS hit $0.20 -- a vast improvement over the $0.04 net loss reported a year ago. Analysts expected the company to report sales and EPS of $66.27 million and $0.08, respectively.
Driving those results was a 60% jump in U.S. sales of its Impella products, which benefited from the March approval to use the Impella 2.5 system in certain high-risk heart procedures.
Rising demand for Abiomed's Impella system allowed the company to leverage growing sales against fixed costs for higher margin, something that the company expects will continue throughout the remainder of this year.
Now what: Following its solid fiscal first quarter results, Abiomed's management is increasing its outlook for the rest of the fiscal year. They expect that Abiomed's full year sales will reach between $300 million and $310 million, up from their previous guidance for between $285 million and $295 million. The company also expects to deliver operating margin of between 14% and 16% this fiscal year.
The increase in guidance could lead industry watchers to boost their earnings outlook for this and next year, and, if so, their optimism could translate into higher share prices. Currently, analysts believe that Abiomed will earn $0.60 this year and $0.87 next year. Based on those estimates, Abiomed isn't a cheap stock. It's currently trading at 13.8 times sales and a whopping 102 times forward earnings. That makes it too pricey for me to want to chase it higher, but I do think that its success warrants it being added to a watch list as a potential candidate to buy for the long term if shares pullback.
