AtriCure's Q1 EPS Miss Estimates, Needham Lowers Price Target

Needham lowered AtriCure Inc's ATRC price target to $67 from $79 due to peer multiple compression, with the Buy rating unchanged.
The analysts write that ATRC broke out cryoSPHERE into a new Pain Management segment, which Needham expects to be a key growth driver in 2022+.
EPi-Sense grew low-double digits in 1Q22, and management expects this to accelerate through the rest of 2022.
Based on these two significant growth drivers, Needham believes that ATRC can grow above its historical mid-teens revenue growth rate for the foreseeable future.
ATRC's open-heart ablation sales reached $25.5 million, up 16.4% vs. (5.9%) in 4Q21.
Minimally invasive ablation sales of $10.1 million missed Needham's estimate of $12.3 million, up 5.1% vs. 41.8% in 4Q21.
Pain management sales of $8.2 million grew 109.2%. Appendage management sales of $30.8 million surpassed Needham's estimate of $29.5 million and grew by 29.2% vs. 28.4% in 4Q21.
Management expects EPi-Sense to accelerate through the year.
ATRC's GAAP gross margin of 74.5% was down 60 bps Y/Y due to geographic mix, product mix, and increasing costs and was just above the consensus of 74.4% (ATRC's long-term gross margin target is 75%).
Guidance: AtriCure sees FY22 adjusted EPS loss of $(1.12)-$(1.07) vs. the consensus of $(1.05).
It expects sales of $318 million -$330 million versus the consensus of $321.65 million.
Price Action: ATRC shares are down 0.44% at $54.39 during the market session on the last check Wednesday.

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