Possis Medical (NASDAQ:POSS) shareholders had -- how shall I put this? -- a bad day yesterday.
Predicted by analysts to come bearing $0.09 per share in profits (pro forma after adding back $0.04 for stock options expensing), the company actually presented Wall Street with a fiscal third quarter 2006 loss of $0.02 (or pro forma profits of $0.03). Predicted by itself to make at least $15.5 million in sales, it reported instead just $15.2 million. As a result, the company's stock has already fallen 10% as of this writing.
But that's just the beginning of the bad news. So far this year, Possis has recorded a grand total of $0.02 per share in net profits. Yet Possis's guidance last quarter called for $0.10 to $0.16 per share for the year. To hit that target, the company would need to report at least four times the profits in fiscal Q4 as it earned in fiscal quarters 1-3 combined. Realizing that is not going to happen, Possis slashed its forward guidance, and is now predicting profits of, at best, $0.03 per share next quarter. Grand total for the year: $0.02 to $0.05 in profits, and $62 million to $63 million in sales.
Aside from that, Mrs. Lincoln, how was the report?
So with fiscal 2006 a wash-out, Possis turned its hopeful eyes toward the future. In fiscal 2007, the company will aim for about $73 million in sales and 17% sales growth. The glow of these happy thoughts even infused the dark cloud of expectations for next quarter, creating a proverbial silver lining around next fiscal year's earnings estimates. If the firm achieves its hoped-for $0.17 to $0.31 per share in profits in fiscal 2007, this will easily result in a triple-digit percentage improvement over this year's results.
The question then, is whether the new guidance can be trusted any more than the old, repeatedly discredited and retracted guidance? And the answer is ... I don't know.
On the one hand, Possis certainly has its work cut out for it as it tries to reestablish credibility among investors. On the other hand, the company listed no fewer than five new products and new products-to-be that, if well received by its customers, could indeed produce the promised sales growth. Possis also noted that the sales slide of its AngioJet drives may have turned a corner, with unit sales reaching 50 in fiscal Q3 2006 -- back up to the level they were at one year ago.
So what happened to put Possis in its current difficulties? Read all about it in:
- Trial Letdown Hits Possis Medical
- The Positive Side of Possis
- Possis Medical in Critical Condition
- Possis' Possible Pitfalls
- Possis Poses Problems
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Fool contributor Rich Smith does not own shares of Possis Medical.
