ABIOMED. A Company With Heart. Want One?

hospital, surgery, lamps
The only lights you’re supposed to be staring into are at the stadium. Yet it happens and Abiomed’s continuing to stake out their share in heart healing and assist.

Abiomed

just rocked another sizzling beat.  However this time was different–better, and even better than that.  “Back up sucker.”  The shoving stopped and ABMD released a fat heaping file.  A bundle full of Q1, 2019 goodies landed right on the trading desk.  Yes, Q1, 2019 is correct.  The hump of analysts gasped with raised arms.  Some saw stars.  The numbers the analysts saw were correct too.

 

It’s sick how many killer healthcare plays there are popping into view.  We know of three–all ramping right now.  ABIOMED’s just one.  But then–138% EPS beat, on record revenue, up 36%.  That gets us pumping.

 

 

Investors love Netflix.  Why?  Because NFLX owns SVOD and the entire world is rapidly becoming their stage.  Thanks Reed.  Liner ad-driven television is over.  Netflix is that growth front.  Investors are loving ABMD as well.  Why?  Because Abiomed is growing–everything.  So NELX and ABMD are equals?  Hardly.  Three stunning factors distinguish ABMD from the wholly wonderful NFLX.

 

 

1.  Zero debt.

Netflix operates in what’s known as a “capital intensive” business.  Such requires an on-going  fire-hose of content spending.  Debt is what fuels that stellar growth.  Collective debt in the out years is increasingly analyst’s concern for NFLX.   While Reed Hastings and gang continue piling on debt, Abiomed, well, doesn’t.  In fact, ABMD has no debt–none.

 

 

baby-1531059_1280
Through their vigorous awareness-raising campaigns, and highly-targeted training programs, ABMD is growing the number of “indications,” or approved uses for their Impella line of pumps. Such growth now includes postpartum cardiac complications.  The company is driving increasing “indications” for their temporary percutaneous mechanical circulatory support devices.

 

 

While hospitals worldwide seem their oyster, ABMD currently focuses their expanding efforts in three markets; the U.S., Germany, and Japan.  “Everywhere else,” says CEO Michael Monogue, “we’re planting seeds.”  How’s this for planting seeds?  ABMD just received approval to begin operations in India.  That counts as a seed, right?

 

 

2.  Profit–now.

What else sets ABMD apart from other stellar winners?  Abiomed’s profitable.  Wait, did we hear that right–profitable?  Yes yes–that’s right.  Abiomed is profitable now, and again, no debt.

 

 

From the conference call it becomes clear.  This medical device maker puts  training, education, and outreach in front.  For fiscal year 2019(current for ABMD) the management team feels they have a jump on training.  Management made a big deal of this fact, helping impress the real company growth strategy.

 

Metrics to watch for ABMD.  Total doctors trained, total hospitals, and devices per location.  One Impella model now in Japan is optical, allowing cloud data access.

 

 

3.  Valuation.

For the yet unconvinced, we have the kicker.   FAAG draws smart investors on fabulous growth and industry positioning.  FAAG has also been nose-bleed expensive.  And ABMD?  ABMD sells for  a peg of 1.98.  Translation?  Cheap–dirt cheap on  earnings growth.  NFLX isn’t cheap on earnings, because it doesn’t create a lot of earnings, only debt and vast potential.  NFLX peg. 2.68.  AMZN peg. 4.39.  FB peg. 1.11–cheap, and a dump truck of trouble no investor needs.

 

 

Graphic, ABMD, hb
Management paid particular attention to training, for all along the line of use. Hospital placement clearly ranks as an investor metric. Their installed base provides data for their “IQ” system(SJGraphic.)

 

 

“We’re fully established in over 200 hospitals.”  Monogue explains strategy on the Q1 conference call.  Volume is driving growth, and growth is about outreach, to doctors and hospitals.  Establishing “best practices” and proper protocol is the focus of our training efforts.  Monogue clearly understands the company must create their own place in the wider market by expanding awareness within the community responsible for using their products.  Establishing “best practices” demonstrates the Impella heart pump’s potential.

 

 

 

The company’s expanding efforts focus on training and the raising of awareness.  Protocols for proper use and the  institutionalizing of “best practices” is how ABMD  sees growth.  It’s working.  Q1 sales up 36%.  And EPS?  $1.95 vs. $0.81 consensus estimate, a  138.8% EPS beat.

 

 

 

Abiomed’s future looks incredibly bright.  One year forecast EPS growth 89%, and 3-5 year rate of 47%.  How can that be bad?

 

 

 

Graphic, ABMD, Mar.
The proof is in the metrics. Three fabulous companies, each rapidly growing, but very differently. Abiomed is not forced to spend into massive and questionable debt in order to drive current results. The long-term debt/capital clearly demonstrates(SJGraphic.)

 

 

Goodness and Horror

ALL FROM  THE SAME STOCK AND CHART.  THAT’S VALUE.

8-3-18.  Close.
Chart, ABMD, 8-5, Long
Abiomed has spent two decades building the company. Now ABMD has gone exponential. This is why we invest.  Begun in 1997 ABMD was launched in pursuit of the artificial heart. They do the same thing now–all most(SJChart.)

 

As secular growth investors, we naturally love Amazon–and we should.  AMZN is however later in it’s growth cycle, a time where share price appreciation may not be as fast as in earlier days.  AMZN is facing the law of large numbers.  That is precisely why STOCKjAW has been hunting for companies in early days.  ABMD fits, along with TELEDOC.  But Abiomed’s already profitable, unlike TDOC.

 

 

TOSS IN A DEATH CROSS AND YOU’RE DONE.  STOCKS DO BOUNCE, EVENTUALLY–USUALLY.
8-3-18.  Close.
Chart, ABBD, 8-5, x
Creating a low cost basis is how long-term investor’s win. Scaling-in while prices drop creates that low basis. ABMD is offering that now, after falling from a high of $450.  Technically it’s a train wreck.  Did you expect a great entry point, and strong technicals?(SJChart.)

 

Abiomed’s Q1, 2019 results brought analysts to their feet.  “Congrats on a great quarter” was the repeated refrain during the call.  Some “congrats” are perfunctory, while others are heart-felt.  Impressed analysts don’t hide their admiration or skepticism.  Having covered the facts, we certainly understand why.

 

 

All medical device makers, such as ABMD, are subject to governmental approvals and pricing shifts.  The CMS, Centers for Medicare/Medicaid Services currently controls a significant amount of Abiomed’s future.  A CMS ruling on 7-26-18, the day the company reported, provided strength to the company’s story.

 

The news was all good.  Most importantly, CMS dumped it’s once-planned intent to cut a key reimbursement rate by 24%.  The ruling also added coverage for the additional use of the Ipella heart pump.  Rulings such as this are detailed.  Find such below.

Massdevice.com

https://www.massdevice.com/medicare-proposes-reimbursement-cuts-abiomeds-impella/

 

 

Price Performance

AMZN  55%ytd,           84%  1 year.  Peg 4.39

NFLX        78%ytd,  90%     1 year.  Peg 2.63

ABMD  101%ytd,   149%   1 year.   Peg 1.98

 

 

 

The “smart money” has turned away from Netflix now, based almost solely on valuation.  Facebook has fallen from grace on regulation fears, execution concern, and the company’s announcement about their future systemic profitability decline; climbing cap-ex and security spending growth set to overtake EPS growth rate.  Meanwhile Amazon and Alphabet shine, the former quite expensively.  Is AMZN worth the premium, vs. ABMD?

 

 

Year-to-date Abiomed has outperformed Amazon by a factor of 2; 101% ytd for ABMD, and 55% ytd AMZN.  ABMD did so while costing less then half of AMZN’s eardrum-flexing 4.39 price-to-earnings growth rate.  Does that make this secular growth phenom a value?  Ah, yes, and no doubt.

 

 

ABIOMED

INVESTOR RELATIONS

http://investors.abiomed.com/investor-relations

 

STOCKjAW IR site and conference call STAR RATING–4 STARS(4/4)

Abiomed’s Q1, 2019 call, 7-26-18, was 46 minutes long.  This company states everything clearly, and concisely.  Their presentation is easy to follow, non-promotional, and contains no jargon, or acronyms.  The bullet-point press releases are perfect preparations for their calls.

 

 

Thanks for reading.

AAA Stockjaw scooter

STOCKJAW.COM

Images sourced from Pixabay.

https://pixabay.com/en/photos/
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Additional resources:

Investopedia.com.  Seriously Wonderful.  Fact.
http://www.investopedia.com/
Charles Schwab.  In Our Opinion, the best broker going.
https://www.schwab.com/public/schwab/client_home
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Be careful.  Do the work.  Have patience, with yourself.  Never put your dreams away.
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