Surmodics, Inc. (NASDAQ:SRDX) is expected to gain from strong growth in theIn Vitro Diagnostics (IVD)segment. Further, the company’s consistent efforts to boost research and development (R&D) functionalities buoy optimism.
Price Performance
In a year’s time, shares of this Zacks Rank #2 (Buy) company have surged 75.2%, against the industry’s 4.5% decline and the S&P 500 index’s fall of 6.6%.
Let us take a quick look at the factors that make Surmodics a solid pick for now.
IVD Segment Driving Growth
Surmodics’ performance continues to be driven by the IVD unit. For more than 35 years, the segment has been a leader in developing an ELISA/EIA, immunoblot/western blot, line assay or microarray.
In the fourth quarter of fiscal 2018, sales in the IVD increased 13.4% to $6.1 million. Per management, the segment saw strong growth in antigen and DNA slide sales in the quarter.
However, operating income in the segment was $2.4 million in the reported quarter, marginally down from the year-ago quarter’s tally. Notably, IVD revenues in the fourth quarter reflected strong growth in antigen and DNA slide sales.
Consistent Efforts to Boost R&D
Surmodics’ efforts to improve R&D stature are a key growth driver. The company’s whole product solutions pipeline and sirolimus-based below-the-knee DCB program deserve a mention here.
Fiscal fourth-quarter R&D expenses were $9.8 million, up 23.4% year over year. Considering the company’s strength in the R&D prospects, it has long-term goals of generating double-digit top line growth by the end of 2019 and EBITDA margins at or above 30% by fiscal 2021.
Which Way Are Estimates Treading?
For the first quarter of fiscal 2019, the Zacks Consensus Estimate is pegged at a loss of a penny, reflecting year-over-year decline of 101%. The same for revenues isat $18.9 million, marking 11.1% improvement year over year.
For fiscal 2019, the Zacks Consensus Estimate for earnings is pinned at 8 cents. For revenues, estimates are pegged at $93.3 million, indicating 14.8% rise year over year.
Surmodics, Inc. Price and Consensus
Other Stocks to Consider
A few other top-ranked stocks in the broader medical space are Veeva Systems Inc (NYSE:VEEV) , Penumbra, Inc (NYSE:PEN) and OPKO Health, Inc (NASDAQ:OPK) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Veeva Systems’ long-term earnings growth rate is projected at 19.5%.
Penumbra has a long-term earnings growth rate of 20%.
OPKO Health’s long-term earnings growth rate is projected at 12%.
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Veeva Systems Inc. (VEEV): Free Stock Analysis Report
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Surmodics, Inc. (SRDX): Free Stock Analysis Report
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