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3 Reasons to Retain Avanos (AVNS) Stock in Your Portfolio
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Avanos Medical, Inc. (AVNS - Free Report) is well poised for growth in the coming quarters, backed by its impressive product line. A solid first-quarter 2022 performance, along with continued focus on its Research and Development (R&D), is expected to contribute further. However, stiff competition and uncertainty in the healthcare industry persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 24.5% compared with 24.2% fall of the industry and 10.9% decline of the S&P 500 composite.
The renowned medical device solutions provider has a market capitalization of $1.29 billion. The company projects 43.5% growth for 2022 and expects to maintain its strong performance. Avanos’ earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed the same in the other two, the average surprise being 1.8%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Product Portfolio: Avanos’ robust product suite raises our optimism. During its first-quarter 2022 earnings call in May, Avanos had confirmed that it continued to see strong growth in its Digestive Health business, with first-quarter growth being more than 6%. Digestive Health portfolio’s NeoMed grew 32% from the continuation of conversions to Avanos’ ENFit technology despite supply constraints. Avanos had also confirmed that its pain management arm witnessed growth of more than 6% compared with the prior-year period, excluding the contribution of OrthogenRx, Inc.
Focus on R&D: We are upbeat about Avanos’ continued focus on its R&D wing to commercialize new products, and enhance the effectiveness, reliability and safety of existing ones. The company has been investing to expand the indications for the use of its pain products with clinical research and studies, as well as associated new product developments. It is also expanding its portfolio with customer-preferred product enhancements.
Avanos’ buyout of NeoMed, Inc. was a significant addition to its Digestive Health products portfolio. Avanos’ acquisition of OrthogenRx (in January) is expected to enhance its chronic pain portfolio.
Strong Q1 Results: Avanos’ robust first-quarter 2022 results buoy optimism. The company saw year-over-year improvement in the overall top and bottom lines. Strength exhibited by Avanos’ core Pain Management segment, along with improvements in both Acute Pain and Interventional Pain solutions, is encouraging. Continued strong demand for Digestive Health products and robust sales of NeoMed are promising. Sustained robust growth for Coolief pain therapy, Game Ready cold and compression therapy systems, and ambIT pumps also raises optimism. Expansion of gross margin bodes well.
Downsides
Uncertainty in Healthcare Industry: Various government authorities periodically review and assess alternative healthcare delivery systems and payment methods. Avanos cannot predict with certainty what healthcare initiatives, if any, will be implemented by the governments, or what ultimate effect healthcare reform or any future legislation or regulation may have on the company’s customers’ purchasing decisions regarding its products. However, the implementation of new legislation and regulation may lower reimbursements for Avanos’ products, reduce medical procedure volumes and adversely affect its business.
Competition: Avanos faces significant competition in both the United States and international markets. Competitors of its products are fragmented by particular product categories and the individual markets for these products are also highly competitive. Such an intensely competitive landscape is likely to put pressure on margins.
Estimate Trend
Avanos is witnessing a positive estimate revision trend for 2022. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved 1.2% north to $1.65.
The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $208.6 million, suggesting an 11.9% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Patterson Companies, Inc. (PDCO - Free Report) and ShockWave Medical, Inc. .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.
AMN Healthcare has gained 13.6% against the industry’s 12.5% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.6%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
Patterson Companies has lost 3.3% compared with the industry’s 10.5% fall over the past year.
ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 44.9% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 189.9%.
ShockWave Medical has gained 4.5% against the industry’s 24.2% fall over the past year.
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3 Reasons to Retain Avanos (AVNS) Stock in Your Portfolio
Avanos Medical, Inc. (AVNS - Free Report) is well poised for growth in the coming quarters, backed by its impressive product line. A solid first-quarter 2022 performance, along with continued focus on its Research and Development (R&D), is expected to contribute further. However, stiff competition and uncertainty in the healthcare industry persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 24.5% compared with 24.2% fall of the industry and 10.9% decline of the S&P 500 composite.
The renowned medical device solutions provider has a market capitalization of $1.29 billion. The company projects 43.5% growth for 2022 and expects to maintain its strong performance. Avanos’ earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters and missed the same in the other two, the average surprise being 1.8%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Product Portfolio: Avanos’ robust product suite raises our optimism. During its first-quarter 2022 earnings call in May, Avanos had confirmed that it continued to see strong growth in its Digestive Health business, with first-quarter growth being more than 6%. Digestive Health portfolio’s NeoMed grew 32% from the continuation of conversions to Avanos’ ENFit technology despite supply constraints. Avanos had also confirmed that its pain management arm witnessed growth of more than 6% compared with the prior-year period, excluding the contribution of OrthogenRx, Inc.
Focus on R&D: We are upbeat about Avanos’ continued focus on its R&D wing to commercialize new products, and enhance the effectiveness, reliability and safety of existing ones. The company has been investing to expand the indications for the use of its pain products with clinical research and studies, as well as associated new product developments. It is also expanding its portfolio with customer-preferred product enhancements.
Avanos’ buyout of NeoMed, Inc. was a significant addition to its Digestive Health products portfolio. Avanos’ acquisition of OrthogenRx (in January) is expected to enhance its chronic pain portfolio.
Strong Q1 Results: Avanos’ robust first-quarter 2022 results buoy optimism. The company saw year-over-year improvement in the overall top and bottom lines. Strength exhibited by Avanos’ core Pain Management segment, along with improvements in both Acute Pain and Interventional Pain solutions, is encouraging. Continued strong demand for Digestive Health products and robust sales of NeoMed are promising. Sustained robust growth for Coolief pain therapy, Game Ready cold and compression therapy systems, and ambIT pumps also raises optimism. Expansion of gross margin bodes well.
Downsides
Uncertainty in Healthcare Industry: Various government authorities periodically review and assess alternative healthcare delivery systems and payment methods. Avanos cannot predict with certainty what healthcare initiatives, if any, will be implemented by the governments, or what ultimate effect healthcare reform or any future legislation or regulation may have on the company’s customers’ purchasing decisions regarding its products. However, the implementation of new legislation and regulation may lower reimbursements for Avanos’ products, reduce medical procedure volumes and adversely affect its business.
Competition: Avanos faces significant competition in both the United States and international markets. Competitors of its products are fragmented by particular product categories and the individual markets for these products are also highly competitive. Such an intensely competitive landscape is likely to put pressure on margins.
Estimate Trend
Avanos is witnessing a positive estimate revision trend for 2022. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved 1.2% north to $1.65.
The Zacks Consensus Estimate for the company’s second-quarter 2022 revenues is pegged at $208.6 million, suggesting an 11.9% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Patterson Companies, Inc. (PDCO - Free Report) and ShockWave Medical, Inc. .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has gained 13.6% against the industry’s 12.5% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.6%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
Patterson Companies has lost 3.3% compared with the industry’s 10.5% fall over the past year.
ShockWave Medical, sporting a Zacks Rank #1 at present, has an estimated growth rate of 44.9% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 189.9%.
ShockWave Medical has gained 4.5% against the industry’s 24.2% fall over the past year.