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Why Is Abiomed (ABMD) Up 1.2% Since Last Earnings Report?

A month has gone by since the last earnings report for Abiomed (ABMD). Shares have added about 1.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Abiomed due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Abiomed Q2 Earnings Top Estimates, Margins Down

Abiomed delivered adjusted earnings per share of $1.30 in the second quarter of fiscal 2023, up 26.2% year over year. The figure surpassed the Zacks Consensus Estimate by 23.8%.

Our projection of adjusted earnings per share was $1.08.

GAAP earnings per share for the quarter was $2.32, up by 87.1% year over year.

Revenues in Detail

Abiomed registered revenues of $265.9 million in the fiscal second quarter, up 7.2% year over year. The figure, however, lagged the Zacks Consensus Estimate by 2.7%.

At CER, revenues improved by 11%.

The fiscal second-quarter revenue compares to our estimate of $275.5 million, up 11% on a reported basis and 13% at CER.

The top line was driven by continued strength in the company’s Impella heart pump product revenues across the world.

Q2 in Detail

Worldwide Impella heart pump product revenues for the quarter totaled $253.2 million, an increase of 7.4% from the prior-year quarter. At CER, revenues improved 11%.

U.S. Impella product revenues totaled $207.9 million, reflecting a rise of 9.6% year over year.

OUS, Impella product revenues totaled $45.3 million, highlighting a decrease of 1.6% year over year on a reported basis. At CER, revenues improved 16%.

Japan product revenues improved 1.5% year over year on a reported basis (up 28% at CER) to $12 million, while Europe product revenues for the quarter totaled $29 million, down by 7.3% on a reported basis but up 9% at CER compared with the prior-year quarter.

Margin Trend

In the quarter under review, Abiomed’s gross profit rose 6.3% to $217 million. Gross margin contracted 70 basis points (bps) to 81.6%.

We had projected a gross margin of 80.7% for the fiscal second quarter.

Selling, general & administrative expenses rose 13.8% to $116.9 million. Research and development expenses went up 2.6% year over year to $42.1 million. Adjusted operating expenses of $159 million increased 10.6% year over year.

Adjusted operating profit totaled $57.9 million, reflecting a 4% decline from the prior-year quarter. The adjusted operating margin in the fiscal second quarter contracted 255 bps to 21.8%.

The adjusted operating margin, according to our model, was 21.2% for the fiscal second quarter.

Financial Position

Abiomed exited the second quarter of fiscal 2023 with cash and cash equivalents of $182.3 million compared with $180.5 million at the end of the fiscal first quarter.

The balance sheet was debt free as of Sep 30, 2022.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -13.06% due to these changes.

VGM Scores

At this time, Abiomed has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Abiomed has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Abiomed is part of the Zacks Medical - Instruments industry. Over the past month, Integra LifeSciences (IART), a stock from the same industry, has gained 12.4%. The company reported its results for the quarter ended September 2022 more than a month ago.

Integra reported revenues of $385.19 million in the last reported quarter, representing a year-over-year change of -0.4%. EPS of $0.86 for the same period compares with $0.86 a year ago.

Integra is expected to post earnings of $0.89 per share for the current quarter, representing a year-over-year change of +6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Integra. Also, the stock has a VGM Score of B.

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