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Why Is AngioDynamics (ANGO) Down 12.1% Since Last Earnings Report?

A month has gone by since the last earnings report for AngioDynamics (ANGO). Shares have lost about 12.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AngioDynamics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

AngioDynamics Misses on Q3 Earnings, International Revenues Down

AngioDynamics reported third-quarter fiscal 2019 adjusted earnings of 19 cents per share, which missed the Zacks Consensus Estimate of 22 cents. The bottom line also declined 17.4% on a year-over-year basis.

Revenues totaled $86.3 million, which fell short of the Zacks Consensus Estimate of $89 million. However, the top line increased 30% on a year-over-year basis.

Geographical Analysis

In the quarter under review, U.S. net revenues totaled $68.3 million, up 3.9% on a reported and constant-currency basis (cc).

International revenues summed $18 million, down 0.3% on a reported basis and up 1.9% at cc.

Segmental Analysis

Vascular Interventions and Therapies (VIT) Business

VIT revenues in the quarter grossed $50.1 million, up 3.3% from the year-ago quarter’s figure. Per management, Fluid Management and AngioVac witnessed solid growth but were partially offset by a decelerating decline in the Venous Insufficiency business.

Vascular Access (VA) Business

Revenues at this segment amounted to $22.3 million, which decreased 4% on a year-over-year basis. Per management, strong revenues from Ports and Dialysis products were slightly offset by a decline in revenues from PICCs, Midlines and Ports.

Oncology/Surgery Business

Revenues at the Oncology segment improved 15.1% year over year to $13.9 million. The segment also saw positive contributions from the two recent acquisitions of BioSentry and RadiaDyne, which was somewhat offset by decreased revenues from NanoKnife capital sales.

Margin Analysis

In the quarter under review, gross profit totaled $46.7 million, up 2.7% from the year-ago quarter number. Nonetheless, gross margin was 54.1%, down 10 basis points (bps). It is encouraging to note that the company continues to see gross margin expansion related to operational and supply chain improvements.

These apart, the company’s portfolio optimization strategy, specifically the RadiaDyne and BioSentry acquisitions, are likely to boost the margins in the coming days. However, these gains are likely to be offset by headwinds related to foreign exchange.

Research and development expenses were $7.2 million, up 11.7% year over year. Sales and marketing expenses totaled $19.4 million, up 7.8% on a year-over-year basis. General and administrative expenses were $8.8 million, up 13.7% year over year.

Net adjusted operating expenses were $35.4 million, up 10% year over year. Adjusted operating income totaled $11.3 million, down 15% year over year. Also, adjusted operating margin was 13.1%, down 270 bps year over year.

Guidance Retained

For fiscal 2019, AngioDynamics continues to expect revenues in the range of $354-$359 million. The midpoint of the latest guidance range is $356.5 million, which lies below the Zacks Consensus Estimate of $359.1 million.

Adjusted earnings per share are expected between 82-86 cents. The midpoint of the latest projection is 84 cents, which lies below the Zacks Consensus Estimate of 86 cents.

Free cash flow is projected within $26-$31 million for fiscal 2019.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a flat path over the past two months.

VGM Scores

Currently, AngioDynamics has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

AngioDynamics has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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