Surmodics (SRDX) Hits Fresh Highs: Is There Still Room To Run?

Have you been paying attention to shares of Surmodics (NASDAQ:SRDX) ? Shares have been on the move with the stock up 30.9% over the past month. SRDX hit a new 52-week high of $51.30 in the previous session. Surmodics has gained 82.1% since the start of the year compared to the -0.4% move for the Medical sector and the 9.1% year-to-date return for its peer group.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 2, 2018, Surmodics reported EPS of $0.07 versus the Zacks Consensus of Estimate $-0.01 while it beat the consensus revenue estimate by 6.33%.

For the current fiscal year, Surmodics is expected to post earnings of $-0.02 per share on $78.42 million in revenues. This represents a -103.92% change in EPS on a 7.26% change in revenues. For the next fiscal year, the company is expected to earn $-0.04 per share on $90.38 million in revenues. This represents a year-over-year change of -100% and 15.25%, respectively.

Valuation Metrics

Surmodics may be at a 52-week high right now, but what might the future hold for SRDX? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Surmodics has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Surmodics currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 and Style Scores of A or B, it looks as if Surmodics passes the test. Thus, it seems as though SRDX shares could still be poised for more gains ahead.

How Does Surmodics Stack Up to the Competition?

Shares of Surmodics have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including BioLife Solutions (NASDAQ:BLFS) , Integer Holdings (NYSE:ITGR) , and STERIS plc (NYSE:STE) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Surmodics. Still, the fundamentals for SRDX are promising, and it still has potential despite being at a 52-week high.