Industry-leading medical devices provider AngioDynamics, Inc. (ANGO) offers innovative diagnostic and surgical devices to treat cancer and peripheral vascular disease in the United States and internationally. A strong revenue performance, driven by a 68% year-over-year surge in Med Tech net sales in the first quarter of fiscal 2022, has helped its shares gain 17.5% over the past five days and 79.5% so far this year. Moreover, the recent limited market release of its AlphaVac mechanical thrombectomy device has garnered significant investor attention.

While the minimally invasive medical devices provider’s Auryon and NanoKnife businesses continue to witness strong demand, finding more growth may be challenging for the company, given the COVID-19 related headwinds and increased competition in the medical devices market.

Here’s what could influence ANGO’s performance in the coming months:

FDA Clearance of AlphaVac and Approval for Pivotal Study

In June, ANGO received the 510(k) clearance from the U.S. Food and Drug Administration (FDA) for the AlphaVac Mechanical Thrombectomy System. The multi-purpose device is used for the non-surgical removal of thrombi or emboli from the vasculature. The company commenced the limited commercial release of the device in the first quarter of fiscal 2022.

Last month, ANGO received the FDA’s approval for the Pivotal Study of the NanoKnife System for Ablation of Prostate Tissue in an Intermediate-Risk Patient Population (PRESERVE). In collaboration with the Society of Urologic Oncology Clinical Trials Consortium, Inc., this study will evaluate the use of the NanoKnife System as a treatment option for prostate cancer patients.

Business Headwinds

Increased costs related to labor, raw materials, and freight and labor shortages negatively impacted the company’s gross margin in the last reported quarter. Moreover, the ongoing COVID-19 pandemic has led to softening demand for medical devices as more people postponed their elective surgeries. ANGO’s Med Device Oncology products continue to face pressure from the decline in procedure volumes due to the pandemic. In addition, its Auryon startup expenses continue to impact its gross margins negatively.

Furthermore, an increase in demand for minimally invasive surgeries amid the growing incidence of chronic diseases has resulted in a substantial increase in participants in the medical devices market. Key players like Medtronic plc (MDT) and Abbott Laboratories (ABT) have enhanced their product portfolio to grab lucrative market opportunities. This could negatively impact the market share and revenue-generating prospects of ANGO.

Mixed Growth Potential

The consensus revenue estimate of $313.7 million for fiscal 2022 represents a 7.8% increase year-over-year. Also, the company’s revenue is expected to increase 7.4% from the prior-year quarter to $333.76 million next year. However, analysts expect ANGO’s EPS to decrease 100% in the current quarter ending November 2021 and 150% in the next quarter ending February 2022. In addition, its EPS is estimated to decline 100% in the current year. But the company’s EPS is expected to increase at the rate of 15% per annum over the next five years.

Mixed Financials

ANGO’s net sales increased 9.6% year-over-year to $77 million for the fiscal first quarter ended August 31, 2021. Its Endovascular Therapies net sales rose 27.5% from the year-ago value to $38.1 million, while gross margin surged 120 basis points from the prior-year quarter to 52.1%. However, ANGO recorded a net loss of $7 million, representing a 62.8% increase year-over-year. Its total operating expenses rose 18% from the prior-year quarter to $48.24 million over this period. Moreover, its adjusted EBITDA declined 20.1% year-over-year to $3.57 million.

Consensus Price Target Indicates Potential Upside

Of the four Wall Street analysts that have provided ratings for the stock, one rated it Buy, and three rated it Hold. Currently trading at $26.74, analysts expect the stock to hit $30 in the near term, indicating a 12.2% potential upside. The price targets range from a low of $28 to a high of $32.

POWR Ratings Reflect Uncertainty

ANGO has an overall rating of C, which translates to Neutral in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight different categories. ANGO has a C grade for Stability. The stock’s beta of 0.86 justifies the grade.

In terms of Value Grade, ANGO has a C. The company’s higher-than-industry forward EV/EBIT ratio is consistent with this grade.

Beyond the grades I’ve highlighted, one can check out additional ANGO ratings for Sentiment, Momentum, Growth, and Quality here. The stock is ranked #96 of 176 stocks in the C-rated Medical – Devices & Equipment industry.

Bottom Line

While ANGO’s substantial investment in its med-tech platform and strategic launch of its AlphaVac device have been driving up its shares, the growing competition from prominent industry players and pandemic-related headwinds in its business could lead to the stock witnessing a pullback in the near term. Furthermore, the company’s mixed growth prospects could add to investors’ concerns. So, we think investors should wait for some improvement in its prospects before investing in the stock.

How Does AngioDynamics, Inc. (ANGO) Stack Up Against its Peers?

While ANGO has an overall C rating, one might want to consider looking at its industry peers, Utah Medical Products, Inc. (UTMD), Fonar Corporation (FONR), and HOYA Corporation (HOCPY), having an overall A (Strong Buy) rating.

ANGO shares were trading at $27.24 per share on Thursday morning, up $0.50 (+1.87%). Year-to-date, ANGO has gained 77.69%, versus a 19.04% rise in the benchmark S&P 500 index during the same period.

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.

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