Surmodics, Inc. (NASDAQ:SRDX) is well poised for growth backed by consistent growth In Vitro Diagnostics (IVD) unit and persistent efforts to bolster research and development (R&D) functionalities. However, the company’s drug-coated balloons continue to face intense competition in the nice space and remains a concern.
The stock currently carries a Zacks Rank #3 (Hold).
Price Performance
Shares of Surmodics have lost 16.4%, against the industry’s growth of 15.9% on a year-to-date basis. Further, the stock compared unfavorably with the S&P 500 Index’s rally of 16.2%.
What’s Weighing on the Stock?
Given the highly fragmented diagnostics market, the company’s SurVeil Drug-Coated Balloons continues to face stiff competition with Medtronic’s admiral IN.PACT platform.
Moreover, surface modification and device drug delivery are competitive markets and carry the risk of technological obsolescence. Meanwhile, the IVD segment faces increased competition.
Factors to Bolster Surmodics
Surmodics’ IVD unit continues to drive the company’s performance as traditionally the segment has been a leader in developing an ELISA/EIA, immunoblot/western blot, line assay or microarray.
Further, the company continues to gain from core Medical Devices unit which witnessed significant contribution from its SurVeil agreement with Abbott. Management anticipates this segment to witness double-digit revenue growth in fiscal 2019.
Surmodics’ continued efforts to boost its R&D stature have been a key growth driver. The company’s whole product solutions pipeline and sirolimus-based below-the-knee DCB program deserve a mention here.
Moreover, acquisitions made by the company in the last few years have not only diversified its revenue base but also expanded customer base.
Which Way Are Estimates Headed?
For 2019, the Zacks Consensus Estimate for revenues is pegged at $91.2 million, indicating an improvement of 12.1% from the year-ago period. For adjusted earnings per share, the same stands at 38 cents, suggesting a decline of 38.8% from the year-ago reported figure.
Key Picks
Some better-ranked stocks from the broader medical space are Cardiovascular Systems, Inc. (NASDAQ:CSII) , Oxford Immunotec Global PLC (NASDAQ:OXFD) and Haemonetics Corporation (NYSE:HAE) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardiovascular Systems has earnings growth rate for fiscal fourth quarter of 2019 of 33.3%.
Oxford Immunotec has a long-term earnings growth rate of 25%.
Haemonetics has a long-term earnings growth rate 13.5%.
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Oxford Immunotec Global PLC (OXFD): Free Stock Analysis Report
Haemonetics Corporation (HAE): Free Stock Analysis Report
Cardiovascular Systems, Inc. (CSII): Free Stock Analysis Report
Surmodics, Inc. (SRDX): Free Stock Analysis Report
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