Abiomed (ABMD) Down 19.9% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Abiomed (ABMD). Shares have lost about 19.9% in that time frame, underperforming the S&P 500.

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

ABIOMED Earnings Beat Estimates in Q3, Guidance Trimmed

ABIOMED reported third-quarter fiscal 2020 earnings per share of $1.51, outpacing the Zacks Consensus Estimate of $1.09. The figure surged 55.7% year over year.

The company’s revenues came in at $221.6 million, which lagged the Zacks Consensus Estimate of $227 million. However, the metric improved 10.5% from the prior-year quarter.

Q3 in Detail

U.S. Impella product revenues totaled $185.6 million, showing an increase of 8% year over year. Per management, U.S. patient usage of the Impella heart pumps rose 5% in the quarter.

Outside the United States, Impella product revenues totaled $36 million, highlighting an increase of 29% year over year. Japan revenues were $8.7 million in the quarter, up a substantial 61% year over year.

Margin Trend

In the quarter under review, gross profit totaled $181.6 million, up 9% year over year. Gross margin in the quarter was 81.9% of net revenues, down 110 basis points (bps) year over year. Research & Development (R&D) costs grossed $25.7 million, up 7.1% year over year.

Operating income totaled $70.3 million, up 12.7% on a year-over-year basis. Operating margin was 31.7%, up 60 bps.

Financial Condition

ABIOMED’s balance sheet is debt free. The company ended the fiscal third quarter with $595.5 million of cash and marketable securities.

Guidance

For fiscal 2020, ABIOMED expects revenues within $846-$877 million, mirroring an increase of 10-14%. This compares to the earlier-projected range of $885-$925 million, calling for an increase of 15-20% year over year.

The company continues to expect operating margin within 28-30%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -17.48% due to these changes.

VGM Scores

Currently, Abiomed has a nice Growth Score of B, a grade with the same score on the momentum front. However, 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 C. 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 this revision indicates a downward shift. It's no surprise Abiomed has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.