AngioDynamics Remains Neutral - Analyst Blog

We reiterate our Neutral recommendation for therapeutic and diagnostic devices maker AngioDynamics (ANGO). The company produced a mixed-bag in second-quarter fiscal 2011 with earnings beating the Zacks Consensus Estimate by a penny while revenues missing the forecast. Despite a modest decline in sales, profit rose 4.8% year over year on the back of management's cost containment measures. The company backed its outlook for fiscal 2011.

Healthy double-digit growth at the Oncology division was partly masked by the declines across Peripheral Vascular and Access businesses. The Vascular division was hit by realignment of the sales force, pricing pressure and slowdown in hospital admission and procedure volume.

Oncology sales leapt 16% year over year, boosted by sustained healthy demand for the company's popular tumor-zapping NanoKnife system. Total number of patients treated with the device stood at 412 at the end of the quarter.

AngioDynamics is a leading provider of therapeutic and diagnostic devices for treating peripheral vascular and other non-coronary diseases. It has market leading positions in several of its operating segments including angiographic products and thrombolytic catheters and products.

AngioDynamics continues to broaden its product portfolio while it is actively pursuing cost management. The company is driving product innovation by investing roughly 10% of its revenues in R&D. AngioDynamics targets launching 10 products through its internal R&D effort in fiscal 2011.

We expect AngioDynamics' focus on interventional peripherals to help drive future growth. Moreover, the company should continue to benefit from the ongoing shift from open surgery to less invasive interventional procedures.

However, AngioDynamics' product lines face strong challenges from the competitive offerings of its larger rivals such as Boston Scientific (BSX) and C.R. Bard (BCR). We also remain cautious about the company's exposure to price competition.

 
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