What’s next for Abiomed (NASDAQ: ABMD)? Growth. Lots and lots of growth.
ABMD has been in the medical device business since 1981.
Usually companies shoulder into a market with something reasonable and unprovocative so they can get a foothold — even a toehold — and some operating capital to grease the wheels of production.
ABMD launched the first artificial heart. It began trading on the stock market six years later. But the one interesting thing ABMD did once it had revolutionized cardio-pulmonary medicine was it stuck to its knitting.
ABMD Stock Shows Restraint
Nowadays, many companies would have hit with something like this and in the midst of the fanfare, would have got funding to keep throwing groundbreaking products into the market and run the stock price up.
But ABMD is still run by smart leadership that is staying laser focused on the heart valve equipment. And today’s devices are far more effective for a much broader audience than its initial product.
Perhaps because of its focus and its lack of sexy products, ABMD sports a modest $16 billion market cap and doesn’t get the attention of bigger name medical companies.
It may be that consumers are more interested in the new pills drug manufacturers develop than the brand of heart pump they are receiving. Some of it may be the massive advertising budgets for drugs — usually that ad spending lands in companies’ R&D budget — and the non-existent advertising for most medical devices.
Maybe it’s the fact that when a doctor tells you they’re going to insert a pacemaker or a heart pump, you’re not really in a place to ask the brand name and then ask if there’s a cheaper model.
Regardless, Abiomed is the global leader in this niche. And as the world’s population grays, its business is going to grow. So far this year, ABMD stock is up 99% and over the past 12 months it’s up 154%.
Today, it has one line of products, Impella. And it’s the world’s smallest heart pump. There are a few versions of it, but that’s it. That isn’t to say there aren’t competitors. There are plenty. But ABMD is already well integrated into the German and Japanese markets and it is well established in the U.S. as well.
Also, as noted in research firm MarketsandMarkets.com’s recent report, the compounded annual growth rate (CAGR) for the heart pump market from now to 2022 is projected to be 19.4%.
Along these lines, ABMD just announced that it added its first patient in India — the world’s second-most-populous country.
ABMD stock recently released its FYQ1 numbers and they were impressive. Revenue was up 36% compared to the same quarter a year ago. Heart pump revenue outside the U.S. was up 75%. US revenue was up 32%.
Gross margin was off slightly but still remains at a very comfortable 83%. The slight dip could be simply the growing demand meant adding people and manufacturing to supply it, which isn’t a bad thing at all.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
