Thoratec Soars to 52-Week High - Analyst Blog
December 12 2012 - 12:35PM
Zacks
Shares of Thoratec Corp (THOR) reached a
52-week high of $39.50 on Tuesday, December 11, 2012. The medical
device stock continues to edge past resistance levels and soared to
another 52-week high. The closing price as of December 11, 2012 was
$39.23, which represented a solid annual return of about 28%.
The stock carries a short-term Zacks #1 Rank (Strong
Buy).
Growth Drivers
A profound mix of solid third quarter earnings, raised guidance,
HeartMate II approval in Japan, expanded geographical reach and
share buybacks are driving the stock price.
With respect to earnings surprise, Thoratec has topped the Zacks
Consensus Estimates in six of the last seven quarters with an
average beat of 14.3%. Its third quarter adjusted earnings per
share of 44 cents easily surpassed the Zacks Consensus Estimate of
33 cents as well as the year-ago earnings of 34 cents per
share.
Total revenues improved 15% on a year-over-year basis to $117.8
million in the quarter, surpassing the Zacks Consensus Estimate of
$112 million. Growth was led by higher volume of the HeartMate II
product line (up 27% year over year) as well as the higher adoption
of Destination Therapy (DT) in the domestic market.
Thoratec revised its financial forecast for 2012. The company
expects revenues between $477 million and $483 million compared
with the prior guidance of $460 million and $470 million. The
updated guidance includes higher sales estimates for the HeartMate
II product line and solid expansion of the ventricular assist
device (VAD) market.
For 2012, earnings per share are expected to be in a band of
$1.79 and $1.83 compared with the prior guidance of $1.67 and
$1.73.
Thoratec continued its momentum in the offshore market,
especially in Western Europe. The company witnessed higher adoption
of its offerings in newer markets like Turkey, where it expects to
capture further market share in the near-term. However,
HeartWare (HTWR) was the first to gain a foothold
in Turkey.
Meanwhile, the recent approval of HeartMate II for
bridge-to-transplantation (BTT) in Japan, the second largest market
for medical devices, is a lucrative route to enter the Asia-Pacific
market and garner incremental revenues. The demographic trends and
increasing healthcare expenditure in Japan should allow for
improved growth profile.
Capital allocation in the form of share buybacks should further
boost investor sentiment. Last month, Thoratec announced a share
buyback program of $150 million.
Estimates Inch Up
The Zacks Consensus Estimate for 2012 increased approximately
8.1% to $1.61 per share over the last 60 days. The current estimate
implies year-over-year growth of 16.49%.
For 2013, the Zacks Consensus Estimate rose by 5.1% over the
same time frame to $1.66 per share, implying year-over-year growth
of 3.42%.
Valuation
Based on 2012 earnings estimates, Thoratec is trading at a
price-to-earnings ratio (P/E) of 24.4x, a 20% premium to the peer
group average of 20.3x. The price-to-sales (P/S) ratio of 4.9x
represents a 39.6% premium to the peer group average of 3.51x. The
company’s strong business fundamentals justify the premium.
About the Company
Pleasanton, California-based Thoratec is a leading developer of
innovative devices for advanced heart failure. Founded in 1976, the
company has a market capitalization of roughly $2.11 billion.
Thoratec has strong presence in the U.S. and Europe with a first
mover advantage in the market it serves.
We currently have a long-term Outperform recommendation on
Thoratec. Medical devices stock carrying a Zacks #1 Rank are
Merit Medical (MMSI), Mesa
Laboratories (MLAB) and Cantel Medical
(CMN).
CANTEL MED CORP (CMN): Free Stock Analysis Report
HEARTWARE INTL (HTWR): Free Stock Analysis Report
MESA LABS INC (MLAB): Free Stock Analysis Report
MERIT MEDICAL (MMSI): Free Stock Analysis Report
THORATEC CORP (THOR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Synthorx (NASDAQ:THOR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Synthorx (NASDAQ:THOR)
Historical Stock Chart
From Jul 2023 to Jul 2024