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Penumbra (PEN) Hits 52-Week High: What's Driving the Rise?
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Shares of Penumbra (PEN - Free Report) reached a new 52-week high of $317.77 on May 9 before closing the session marginally lower at $314.87.
In the past year, this Zacks Rank #1 (Strong Buy) stock has risen 134.8% compared with a 9.1% rise of the industry and the S&P 500 composite’s increase of 4.9%.
Penumbra has an expected earnings growth rate of 70.7% for the next year. In the last reported quarter, Penumbra’s revenues surpassed the Zacks Consensus Estimate by 4.7%. The average earnings surprise in the trailing four quarters was 109.42%
PEN is witnessing an upward trend in its stock price, prompted by the robust performance of its Vascular business, including the strength of the U.S. vascular thrombectomy franchise and the product launches of Lightning Flash and Lightning Bolt. The optimism led by its recently released first-quarter 2023 financial results and a favorable revision of the 2023 outlook is expected to contribute. However, associated costs related to the launch of new products have partially affected the company’s first-quarter performance.
Let’s delve deeper.
Key Growth Drivers
Better-Than-Expected Q1 Performance & Raised Sales Guidance: Penumbra exited the first quarter of 2023 with both revenues and earnings beating the Zacks Consensus Estimate. The company’s vascular and neuro product categories showed encouraging growth trends.
Image Source: Zacks Investment Research
Penumbra’s reported revenues of $241.4 million in the first quarter were up 18.4% year over year, highlighting a 16.3% increase in sales of vascular products from the prior-year quarter and a 21.5% increase in sales of neuro products year over year. The company noted that the sequential increase in the quarter’s revenues by $20 million is the fastest sequential dollar growth in its history, excluding the pandemic-related second to third quarter of 2020.
The first quarter’s reported gross margin of 62.6% was in line with PEN’s expectations, impacted by a product mix, a regional mix and startup costs associated with new product launches. A favorable product mix, an improvement in productivity and leveraging fixed costs on higher volumes of new product sales during the year are expected to favorably impact the company’s gross margin in the coming quarters.
Barring the amortization expense of finite-intangible assets acquired in connection with the Sixense acquisition, Penumbra reported a $10.4 million non-GAAP income from operations in the first quarter — a significant improvement from the non-GAAP loss from operations of $2.3 million in the prior-year quarter.
Meanwhile, Penumbra raised its 2023 revenue guidance to the range of $1.04-$1.06 billion, indicating year-over-year growth of 23%-25% from the 2022 reported figure. On the fourth-quarter 2022 earnings call, the company only specified the lower limit of 2023 revenues of $1 billion.
The Potential of New Product Launches: Penumbra’s Lightning Flash is the most advanced and powerful mechanical thrombectomy system in the market. It features the novel Lightning Intelligent Aspiration technology combined with dual clot detection algorithms.
Despite limited supply throughout the first quarter, the product is driving acceleration in Penumbra’s U.S. vascular business, which grew 23% year over year, and U.S. vascular thrombectomy franchise, which grew 26% year over year in the first quarter.
Penumbra expects the momentum generated through the acceleration of Lightning Flash demand to continue longer than a typical product launch, given the propriety of technology, the size of the opportunity and the current state of the thrombectomy market.
The company’s newest launch of Lightning Bolt 7 also garnered extraordinary feedback from physicians. The differentiated success for both Lightning Flash and Lightning Bolt 7 and successful product launches in stroke have also spread out to the investment community.
Within the Neuro franchise, acceleration in Penumbra’s stroke business was driven by the launch of RED 72, featuring the proprietary inner catheter SENDit technology and RED 43. Along with the recently launched BMX81, these new products are critical in building a strong foundation for Penumbra’s computer-orchestrated platform for stroke, Thunderbolt.
Collaboration to Add Value: Penumbra recently established a three-year collaboration with the Department of Veteran Affairs Office of Healthcare Innovation and Learning to test, co-develop and scale virtual reality solutions for veterans in multiple health-care settings, including home.
These solutions will largely be used for veteran neurorehabilitation and chronic condition management. Additionally, these will also help to develop the business model to scale this business in the years ahead to the ultimate benefit of many patients.
Downsides
Costs Related to New Launches: Higher start-up costs associated with multiple new product launches and the regional mix affected Penumbra’s first-quarter 2023 gross margin.
Other Key Picks
Some other top-ranked stocks in the overall healthcare sector are Owens & Minor (OMI - Free Report) , Accelerate Diagnostics (AXDX - Free Report) and SiBone (SIBN - Free Report) .
Owens & Minor, sporting a Zacks Rank #1 at present, has an estimated growth rate of 47.29% for the next year. OMI’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average surprise being 33.12%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Owens & Minor’s shares have decreased 53.2% compared with the industry’s 25% decline in the past year.
Accelerate Diagnostics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 14.47% for 2023. AXDX’s shares have increased 9.6% in the past year compared with the industry’s rise of 7.9%.
In the last reported quarter, Accelerate Diagnostics delivered an earnings surprise of 12.50%, the average surprise in the trailing four quarters being 16.22%.
SiBone, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.80%. SiBone’s shares have risen 64.6% compared with the industry’s 8% rise over the past year.
SIBN’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 11.11%.
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Penumbra (PEN) Hits 52-Week High: What's Driving the Rise?
Shares of Penumbra (PEN - Free Report) reached a new 52-week high of $317.77 on May 9 before closing the session marginally lower at $314.87.
In the past year, this Zacks Rank #1 (Strong Buy) stock has risen 134.8% compared with a 9.1% rise of the industry and the S&P 500 composite’s increase of 4.9%.
Penumbra has an expected earnings growth rate of 70.7% for the next year. In the last reported quarter, Penumbra’s revenues surpassed the Zacks Consensus Estimate by 4.7%. The average earnings surprise in the trailing four quarters was 109.42%
PEN is witnessing an upward trend in its stock price, prompted by the robust performance of its Vascular business, including the strength of the U.S. vascular thrombectomy franchise and the product launches of Lightning Flash and Lightning Bolt. The optimism led by its recently released first-quarter 2023 financial results and a favorable revision of the 2023 outlook is expected to contribute. However, associated costs related to the launch of new products have partially affected the company’s first-quarter performance.
Let’s delve deeper.
Key Growth Drivers
Better-Than-Expected Q1 Performance & Raised Sales Guidance: Penumbra exited the first quarter of 2023 with both revenues and earnings beating the Zacks Consensus Estimate. The company’s vascular and neuro product categories showed encouraging growth trends.
Image Source: Zacks Investment Research
Penumbra’s reported revenues of $241.4 million in the first quarter were up 18.4% year over year, highlighting a 16.3% increase in sales of vascular products from the prior-year quarter and a 21.5% increase in sales of neuro products year over year. The company noted that the sequential increase in the quarter’s revenues by $20 million is the fastest sequential dollar growth in its history, excluding the pandemic-related second to third quarter of 2020.
The first quarter’s reported gross margin of 62.6% was in line with PEN’s expectations, impacted by a product mix, a regional mix and startup costs associated with new product launches. A favorable product mix, an improvement in productivity and leveraging fixed costs on higher volumes of new product sales during the year are expected to favorably impact the company’s gross margin in the coming quarters.
Barring the amortization expense of finite-intangible assets acquired in connection with the Sixense acquisition, Penumbra reported a $10.4 million non-GAAP income from operations in the first quarter — a significant improvement from the non-GAAP loss from operations of $2.3 million in the prior-year quarter.
Meanwhile, Penumbra raised its 2023 revenue guidance to the range of $1.04-$1.06 billion, indicating year-over-year growth of 23%-25% from the 2022 reported figure. On the fourth-quarter 2022 earnings call, the company only specified the lower limit of 2023 revenues of $1 billion.
The Potential of New Product Launches: Penumbra’s Lightning Flash is the most advanced and powerful mechanical thrombectomy system in the market. It features the novel Lightning Intelligent Aspiration technology combined with dual clot detection algorithms.
Despite limited supply throughout the first quarter, the product is driving acceleration in Penumbra’s U.S. vascular business, which grew 23% year over year, and U.S. vascular thrombectomy franchise, which grew 26% year over year in the first quarter.
Penumbra expects the momentum generated through the acceleration of Lightning Flash demand to continue longer than a typical product launch, given the propriety of technology, the size of the opportunity and the current state of the thrombectomy market.
The company’s newest launch of Lightning Bolt 7 also garnered extraordinary feedback from physicians. The differentiated success for both Lightning Flash and Lightning Bolt 7 and successful product launches in stroke have also spread out to the investment community.
Within the Neuro franchise, acceleration in Penumbra’s stroke business was driven by the launch of RED 72, featuring the proprietary inner catheter SENDit technology and RED 43. Along with the recently launched BMX81, these new products are critical in building a strong foundation for Penumbra’s computer-orchestrated platform for stroke, Thunderbolt.
Collaboration to Add Value: Penumbra recently established a three-year collaboration with the Department of Veteran Affairs Office of Healthcare Innovation and Learning to test, co-develop and scale virtual reality solutions for veterans in multiple health-care settings, including home.
These solutions will largely be used for veteran neurorehabilitation and chronic condition management. Additionally, these will also help to develop the business model to scale this business in the years ahead to the ultimate benefit of many patients.
Downsides
Costs Related to New Launches: Higher start-up costs associated with multiple new product launches and the regional mix affected Penumbra’s first-quarter 2023 gross margin.
Other Key Picks
Some other top-ranked stocks in the overall healthcare sector are Owens & Minor (OMI - Free Report) , Accelerate Diagnostics (AXDX - Free Report) and SiBone (SIBN - Free Report) .
Owens & Minor, sporting a Zacks Rank #1 at present, has an estimated growth rate of 47.29% for the next year. OMI’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, the average surprise being 33.12%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Owens & Minor’s shares have decreased 53.2% compared with the industry’s 25% decline in the past year.
Accelerate Diagnostics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 14.47% for 2023. AXDX’s shares have increased 9.6% in the past year compared with the industry’s rise of 7.9%.
In the last reported quarter, Accelerate Diagnostics delivered an earnings surprise of 12.50%, the average surprise in the trailing four quarters being 16.22%.
SiBone, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.80%. SiBone’s shares have risen 64.6% compared with the industry’s 8% rise over the past year.
SIBN’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average surprise being 11.11%.