Updated Research Report on AngioDynamics - Analyst Blog

On May 22, we have updated our research report on AngioDynamics Inc. ANGO. New offerings from recent acquisitions as well as from the organic business are expected to boost revenues in the near future. However, soft sales in the U.S. and ongoing difficulties in the medical device industry are causes of concern.

ANGO reported flat adjusted earnings per share of 16 cents for the third quarter of fiscal 2014 ended Feb 28, 2014 compared with the same quarter a year ago. Nevertheless, earnings per share exceeded the Zacks Consensus Estimate by 6 cents. Adjusted net earnings inched up 0.6% to $5.6 million from $5.5 million a year ago.

Revenues in the quarter went up 8.1% to $88.2 million from $81.6 million in the year-ago quarter, edging past the Zacks Consensus Estimate of $87 million. The top line growth was driven by double-digit sales growth in the Peripheral Vascular and Oncology/Surgery businesses and a significant turnaround in Vascular Access business brought about by the success of ANGO's BioFlo products.

Given the strong sales performance in the first nine months of fiscal 2014, ANGO raised its revenue guidance to a range of $351 to $355 million for fiscal 2014 from the prior range of $349 to $353 million. The Zacks Consensus Estimate of $354 million lies within the company's guided range.

ANGO lowered its adjusted earnings per share guidance for fiscal 2014 to a range of 60 to 63 cents from the prior range of 63 to 67 cents, mainly due to its current product and geographic mix, as well as unanticipated costs related to the recent Medcomp agreement. Nevertheless, the guided range is significantly higher than the Zacks Consensus Estimate of 30 cents for fiscal 2014.

For the fourth quarter of fiscal 2014, ANGO anticipates revenues between $91 and $95 million. The Zacks Consensus Estimate of $93 million lies within the company's guided range. Adjusted earnings per share for the quarter are expected in the range of 18 to 21 cents, which is notably higher than the Zacks Consensus Estimate of 11 cents.

During the third quarter, ANGO completed its operational excellence program which was announced last quarter. The program is designed to save $15 to $18 million over the course of the next three years through greater efficiencies and improved business performance.

Currently, ANGO retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical instrument industry include Alphatec Holdings, Inc. ATEC, RTI Surgical Inc. RTIX, and Natus Medical Inc. BABY. Both Alphatec Holdings and RTI Surgical carry a Zacks Rank #1 (Strong Buy), while Natus Medical retains a Zacks Rank #2 (Buy).