Abiomed, Inc.

ABMD Details

Abiomed, Inc. (NASDAQ: ABMD) provides medical devices that provide circulatory support and oxygenation. ABMD develops, manufactures, and markets products designed to enable the heart to rest, heal, and recover by improving blood flow to the coronary arteries and end-organs and temporarily performing the heart's pumping function. Its product pipeline consists of Impella 2.5, Impella CP, Impella 5.0, Impella LD, Impella 5.5 and Impella RP devices that have cured thousands of patients globally.

Progress Towards Regulatory Approval: On August 18, 2021, ABMD announced that the US Food and Drug Administration (FDA) had granted breakthrough device designation to its Impella heart pump, which is the world's smallest heart pump measuring 3mm in diameter which expands in the heart to support the heart's pumping function, providing a flow rate of more than 3.5 L/min. This designation by the FDA will accelerate the Impella ECP's regulatory review process and pre-market approval application. 

Treating Coronary Disorders Through Innovation: On June 29, 2021, FDA granted pre-market approval to ABMD's Impella RP, its latest right heart pump, as a safe and effective to treat acute right heart failure for up to 14 days.

Acquisition of preCARDIA: On June 01, 2021, ABMD acquired the remaining stake in preCARDIA, developer of a proprietary catheter and controller, for USD 82.8 million. The acquisition will complement ABMD's product portfolio by enhancing treatment options for acute decompensated heart failure (ADHF).

Q1FY22 Results:  The company reported YoY growth of 53.22% in revenue to USD 252.59 million in Q1FY22 (ended June 30, 2021) compared to USD 164.85 million in Q1FY21. Product revenue, which represented 95.60% of the total revenue in Q1FY22, increased 55.37% YoY, driven by higher utilization of Impella heart pump in the US, whereas the Service and other revenue registered an improvement of 17.79% YoY. ABMD reported a net loss of USD 26.53 million in Q1FY22 vs. a net income of USD 44.59 million in Q1FY21. As of June 30, 2021, the company stood with cash and cash equivalents (including short-term investments) of USD 523.03 million and no outstanding debt.

Key Risks: ABMD generates most of its revenue from Impella products and services. Therefore, any decline in endorsement by physicians and the readiness of patients to purchase the products or disruption in manufacturing and quality issues of Impella devices could hurt the company's financials. In addition, about 18% of ABMD's revenues were in currencies other than USD in Q1FY22, thus exposing it to exchange rate fluctuations.

Outlook: In FY22, ABMD expects to generate total revenue in the range of USD 1.03 – 1.05 billion, thus realizing YoY growth of 22% – 24%, along with a non-GAAP operating margin to the tune of 24% - 26%.

Valuation Methodology: Price/Earnings Per Share-Based Relative Valuation

 (Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ABMD Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: ABMD's stock price has increased 25.98% in the past three months and is currently trading close to the higher-end of its 52-week range of USD 242.73 to USD 387.40. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 69.83. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 304.83. Considering the uptick in the stock price, we believe the current price adequately reflects the business fundamentals and recommend a "Sell" rating on the stock at the current price of USD 357.63, up 1.65% as of August 24, 2021, 12:39 PM ET.

* All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.