Penumbra (PEN) Q1 Earnings & Revenues Top Estimates, View Up

Penumbra, Inc. (NYSE:PEN) reported first-quarter 2018 adjusted earnings per share of 6 cents against the adjusted loss of 10 cents in the year-ago quarter. Moreover, the bottom line remained well ahead of the Zacks Consensus Estimate of a loss of 2 cents.

Total revenues in the reported quarter surged 40.3% year over year (up 36.2% at constant exchange rate or CER) to $102.7 million, exceeding the Zacks Consensus Estimate of $93 million.

Geographically, first-quarter revenues in the United States (representing 64% of total sales) grossed $65.8 million, up 35.7% from the year-ago period. Meanwhile, international sales (36% of total sales) improved 49.2% year over year (up 37.1% at CER) to $36.9 million.

Penumbra, Inc. Price, Consensus and EPS Surprise

Penumbra, Inc. Price, Consensus and EPS Surprise | Penumbra, Inc. Quote

Per the product category, revenues from neuro products grew 42.2% (up 37.3% at CER) to $71.4 million in the quarter under review. Revenues from peripheral vascular product business rose to $31.3 million in the first quarter, reflecting an increase of 36.2% (up 33.7% at CER) year over year.

Operational Update

Penumbra’s first-quarter gross margin was 64.8%, representing a 36-basis point (bps) contraction year over year. However, gross profit climbed 39.5%.

Research and development expenses totaled $8 million, up 13.9% while sales, general and administrative expenses amounted to $54.5 million, up 27.6% year over year. Operating profit in the reported quarter came in at $4 million versus the operating loss of $2 million in the prior-year quarter.

Financial Update

Penumbra exited the first quarter of 2018 with cash and cash equivalents of $52.8 million compared with $50.6 million at the end of 2017.

Outlook

Penumbra has raised its guidance for 2018 revenues. The company now expects total revenues in the range of $410-$415 million compared with the earlier-provided projection of $400-$405 million. The Zacks Consensus Estimate of $404.1 million lags the guided range.

Our Take

Penumbra exited first-quarter 2018 with better-than-expected results. The year-over-year comparison of earnings was favorable. Moreover, the company witnessed strong growth across all geographies as well as product lines. The company is focusing on product innovation through research and development. On the flip side, escalating costs and expenses are weighing on the bottom line.

Penumbra is an active player in the fast-growing interventional therapies space. In fact, the company’s products primarily cater to the unmet clinical needs across the two major markets of neuro and peripheral vascular.

Zacks Rank & Key Picks

Penumbra has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical space, which have reported solid financial figures this reporting cycle are, Intuitive Surgical (NASDAQ:ISRG) , Chemed Corp. (NYSE:CHE) and Baxter International Inc. (NYSE:BAX) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Baxter carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported first-quarter 2018 adjusted EPS of $2.44, which beat the Zacks Consensus Estimate by 22.6%. Revenues totaled $848 million, also surpassing the consensus estimate by 10.6%.

Chemed posted first-quarter 2018 adjusted EPS of $2.72, surpassing the Zacks Consensus Estimate of $2.37. Revenues came in at $439.2 million, beating the Zacks Consensus Estimate of $420 million.

Baxter posted first-quarter 2018 adjusted EPS of 70 cents, which outpaced the Zacks Consensus Estimate by 12.9%. Revenues of $2.68 billion also edged past the Zacks Consensus Estimate of $2.62 billion.

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