AngioDynamics Remains Neutral - Analyst Blog

We recently reiterated our ‘Neutral’ rating on AngioDynamics Inc. (ANGO) with a target price of $17 based on a P/E of 29.8x our fiscal 2011 EPS estimate of 57 cents. The company’s results for the third quarter fiscal 2010 were mixed.

 

In the third quarter, AngioDynamics reported earnings per share of 13 cents, higher than the Zacks Consensus Estimate of 12 cents but lower than the year-ago figure of 15 cents.

 

Total revenue in the third quarter increased 6% year over year to $52.2 million. Peripheral Vascular sales increased 8% year over year to $22.4 million. Growth was led by higher sales of VenaCure EVLT, Benephit targeted renal therapy systems, and Micro-Introducer kits.

 

Oncology/Surgery sales increased 19% year over year to $13.7 million. Growth was due to higher demand for RF ablation products and NanoKnife.

 

Access revenue declined 6% year over year to $16.1 million. The decline can be attributed to lower average selling prices (ASPs) of certain Access products due to a competitive pricing environment, and delay in new product launches.

 

On a geographic basis, the U.S. contributed 89% to the total revenue and increased 5.2% year over year. International revenues increased 8.4% year over year.

 

Gross margin declined 310 basis points (bps) year over year in the third quarter to 58.0%. The decline was due to lower ASPs of some Access and Peripheral Vascular products as a result of a competitive pricing environment. Higher raw material costs for certain Access products also contributed to the decline.

 

However, AngioDynamics’ strong cost control initiatives helped increase operating and net margins. Both operating and net margins increased 540 bps and 250 bps year over year to 10.7% and 6.4%, respectively.

 

AngioDynamics is engaged in the designing, development, manufacture and marketing of therapeutic and diagnostic devices to treat peripheral vascular disease (PVD) and other non-coronary diseases.