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Surmodics Receives FDA's Approval for PTA Balloon Catheter

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Surmodics Inc. (SRDX - Free Report) recently announced that it has received U.S. Food and Drug Administration (FDA) 510(k) and CE Mark clearance for its .014” low-profile percutaneous transluminal angioplasty (PTA) balloon dilation catheter. The aforementioned product was designed for peripheral angioplasty procedures.

Surmodics’ shares have outperformed the industry in the past three months. The stock has rallied 20.1%, compared with the industry's 0.5% gain in the same period. The current level is also better than the S&P 500's return of 2.4%. The regulatory approval for the aforementioned product, reflect Surmodics’ peripheral angioplasty procedures, particularly in the drug delivery space.

Surmodics .014” PTA balloon catheter offers deliverability and lesion crossing by leveraging the company’s proprietary Serene hydrophilic coating. The Serene hydrophilic coating is proficient in avoiding friction and particulates. The company’s proprietary balloon and catheter technology, combined with Surmodics’ advanced processes, ensures ultra-low tip entry and crossing profile with smooth transitions, to achieve smooth product performance.

The development of the Surmodics .014” low-profile PTA catheter is a step forward in the company’s strategy to be a provider of whole-product vascular solutions for its medical device customers. Surmodics now has complete capabilities for design, development and high-volume manufacturing of a wide variety of highly differentiated balloon catheter and specialty catheter solutions.

With a complete suite of in-house capabilities at its state-of-the-art facility in Ballinasloe, Ireland, Surmodics controls every step of the manufacturing process to produce high-quality, reliable balloon catheters.

On the flip side, the company anticipates an increase in R&D expenses in the second half of fiscal 2017. This is because of increased investments related to the SurVeil DCBtrial and other proprietary products.

Estimate Revision Trend

The latest estimate revision trend has been favorable for the company. For the current year, one estimate moved north compared with none in the opposite direction in the last two months. As a result, the Zacks Consensus Estimate for full-year earnings has moved up 28% to 32 cents per share.

Our Take

According to a report by Market Research Future, the global peripheral artery disease market is expected to reach a worth of $3.47 billion at a CAGR of 6.5% in the 2017-2023 period. Considering the huge potential of the market, we believe that the latest development is a strategic fit.

Zacks Rank & Key Picks

Surmodics carries a Zacks Rank #3 (Hold). A few better-ranked medical stocks in the medical sector include Edwards Lifesciences Corporation (EW - Free Report) , Lantheus Holdings, Inc and IDEXX Laboratories, Inc (IDXX - Free Report) .  While Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), Lantheus Holdings and IDEXX hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19.9% in the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has gained 40.7% in the last six months.

IDEXX has a long-term expected earnings growth rate of 19.8%. The stock has gained around 4.7% in the last six years.

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