Stock Analysis

Results: Abiomed, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

  •  Updated
NasdaqGS:ABMD
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Abiomed, Inc. (NASDAQ:ABMD) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 2.4% to hit US$232m. Abiomed also reported a statutory profit of US$1.35, which was an impressive 20% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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NasdaqGS:ABMD Earnings and Revenue Growth January 31st 2021

After the latest results, the nine analysts covering Abiomed are now predicting revenues of US$998.1m in 2022. If met, this would reflect a substantial 23% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 7.4% to US$4.78. Before this earnings report, the analysts had been forecasting revenues of US$1.00b and earnings per share (EPS) of US$4.96 in 2022. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 16% to US$378, suggesting that these impacts are not expected to weigh on the stock's value in the long term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Abiomed at US$425 per share, while the most bearish prices it at US$245. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of Abiomed'shistorical trends, as next year's 23% revenue growth is roughly in line with 19% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 9.3% per year. So it's pretty clear that Abiomed is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Abiomed going out to 2025, and you can see them free on our platform here..

Before you take the next step you should know about the 1 warning sign for Abiomed that we have uncovered.

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