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Abiomed Hits New 52-Week High: 4 Factors Driving the Stock

Abiomed, Inc. ABMD scaled a new 52-week high of $268.72 on Feb 16, eventually closing a bit lower at $267.74. The company’s shares have gained 74.6% in the last six months, compared with the broader industry’s 14.6% gain.

Headquartered in Danvers, MA, Abiomed is engaged in developing, manufacturing and marketing of medical products, designed to assist or replace the pumping function in cases of heart failure.

It is currently one of the top-performing stocks in the MedTech space. Improvement in price performance and strong fundamentals indicate the stock’s bullish run. Therefore, if you haven’t taken advantage of the price appreciation yet, it’s time you add the stock to your portfolio. A long-term expected earnings growth rate of 31.5% also holds promise.

 

 

Solid Fundamentals

The stock has a market cap of $11.86 billion. Abiomed’s five-year historical growth rate is also favorable at 83.4% as compared with the broader industry’s 9.9% and the S&P 500’s 2.8%.

The company has a Zacks Rank #3 (Hold), which indicates robust fundamentals and expectations of in-line performance in the near term. The company has an impressive Growth Style Score of A. Our Growth Style Score highlights all the vital metrics of a company’s financials to obtain a clearer picture of the quality and sustainability of its growth. Our research shows that stocks with Style Scores of A or B when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 offer the best investment opportunities.

4 Factors Driving the Stock

Let’s take a look at three major factors that have been boosting Abiomed of late.

Strong Earnings Results

Abiomed recently exited the third quarter of fiscal 2018 with better-than-expected revenues and margins. During the quarter, the company witnessed breakthroughs in terms of record revenue and earnings growth. Also, the expansion in margins buoys optimism.

Guidance Raised

Based on the strong third-quarter performance, the company raised fiscal 2018 revenue guidance again to $583 million from the earlier $565-$575 million.

Fourth-quarter revenues are estimated at $164 million, up 31% on a year-over-year basis.

The guidance for operating margin for fiscal 2018 has also been raised to 26% from the earlier expectation of 23% to 25%.

Regulatory Approvals for Impella Product Line

Abiomed recently announced expanded FDA Pre-Market Approval (PMA) for its flagship Impella 2.5, Impella CP, Impella 5.0 and Impella LD heart pumps. With this expanded PMA, these heart pumps can now be used to treat heart failure associated with cardiomyopathy leading to cardiogenic shock, including peripartum and postpartum cardiomyopathy.

Also, Abiomed recently announced that its flagship Impella 2.5 and Impella CP heart-pumps have received PMA from the FDA for expanded use. With this, the products will now be used during elective and urgent high-risk percutaneous coronary intervention procedures.

Per bcc Research, the global market for cardiac medical devices is projected to reach $67.5 billion by 2019, at a CAGR of 5.3% during 2014-2019. Considering the prospects in the niche space, we expect Abiomed to gain solid market traction in the years to come.

Northward Estimate Revision

Five estimates for the current quarter moved north in the past 60 days against one southward revision, which indicates analysts’ optimism. The Zacks Consensus Estimate for adjusted earnings increased 12.5% for the current quarter to how much 63 cents. Also, year-over-year growth is expected at 31.4%. The positive trend signifies analysts’ bullish sentiment.

Key Picks

Some better-ranked stocks in the broader medical sector are PerkinElmer PKI, Bio-Rad Laboratories BIO and Becton, Dickinson and Company BDX.

Bio-Rad Laboratories has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The company has a long-term expected earnings growth rate of 25%.

PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.

Becton, Dickinson has a Zacks Rank #2. The company has a long-term expected earnings growth rate of 13.3%.

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