Abiomed Declares Share Repurchase - Analyst Blog
November 16 2012 - 10:20AM
Zacks
Leading cardiac assist devices
maker, Abiomed Inc. (ABMD) recently approved a
share repurchase program of up to $15 million of its common stock,
thereby leveraging earnings power. The company will finance the
program with the available cash.
The company exited its last reported quarter with cash, cash
equivalents and short-term marketable securities of $89 million,
46.4% higher than the previous-year quarter. The company had no
debt.
However, neither did the company specify the exact timing and
duration of the share repurchase program nor did it reveal whether
it will buyback shares in the open market or via private
negotiations.
The decision reflects the company’s confidence in its fundamentals.
At the same time, the share buyback will help it reduce the share
count, thereby increasing earnings per share and return on equity.
The announcement is not only expected to reinforce shareholders’
confidence but also boost the market value of the outstanding
shares.
Massachusetts-based Abiomed is engaged in developing, manufacturing
and marketing of medical products designed to assist or replace the
pumping function of the failing heart. With a market-cap of $535
million, the company is enjoying strong demand for its Impella
products. Impella utilization continues to grow at a healthy pace,
as is evident from the increasing number of patients being treated
with the device.
However, we are aware of negative sentiments amongst investors
regarding the Impella 2.5 investigation process. In this scenario,
its competitors, such as Thoratec Corporation
(THOR), will likely take advantage of the situation and gain market
share. Our ‘Neutral’ recommendation on the stock carries a
short-term Zacks #3 Rank (Hold) rating.
ABIOMED INC (ABMD): Free Stock Analysis Report
THORATEC CORP (THOR): Free Stock Analysis Report
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