ABMD Is a No-Brainer
Over the last 52 weeks, shares of ABIOMED, Inc. (NASDAQ:ABMD) stock are up 69.57%, while the benchmark S&P 500 is up 2.36%. The more I delve into this company and its financials, the more I am enamored with its prospects going forward. It’s not every day that I come across a company with such a bright future that’s operating in such an effective way. (I cannot decide what I am feeling: is this love or infatuation?)
Abiomed develops groundbreaking technologies to produce cardiac devices that assist or replace a failing heart. The company’s staple product is the “Impella Platform,” which includes the smallest heart pump in the world. The number of lives this company saves increases incrementally every day.
And the market size is getting bigger all the time. Abiomed has attained remarkable growth and has only penetrated a small fragment of the market (approximately six percent) so far.
While competition is fierce in the sector, Abiomed continues to grow. The company has increased its year-over-year growth by 43% and its rate of growth has risen incrementally year-over-year. Most of the increase in the company’s Impella product revenue was from “Impella CP” and “Impella 2.5” catheter sales in the United States.
On April 7, 2016, the company announced three new devices received U.S. Food and Drug Administration (FDA) approval, marking the company’s third FDA approval announcement within the last 15 months. The new product pipeline will add to an already increasing margin of growth.
And if that weren’t enough, more products are awaiting FDA approval.
Current growth is mainly attributed to U.S. sales, but that metric will change as more product interest picks up overseas. For example, Japanese doctors have begun training using Abiomed’s medical devices, specifically the Impella Platform. This is just another factor adding to the company’s incredible growth prospects for the foreseeable future.
Abiomed has a phenomenal balance sheet, $213 million is cash and cash equivalents, and zero long-term debt. That’s not a one-off occurrence; I had to check that last metric a few times just to be sure. It’s not everyday you come across a Biotech with zero long-term debt.
Abiomed’s product line maintains an impressive 85% profit margin. This allows the company to internally fund innovative and groundbreaking technologies.
It’s also great news for investors in ABMD stock because there is no need for the company to access the cash markets. An Abiomed stock investor need not worry about the risks involved with share dilution via the issuance of stock. An ABMD stock investor also need not worry about any headwinds or costs associated with exorbitant debt or debt covenants. Abiomed should continue to develop and grow at a rapid pace.
Continued Share Performance
ABMD stock has traded in a $30.00 range for the duration of approximately 11 months. Resistance on a weekly closing basis was approximately $105.00. ABMD stock confirmed a breakout of this range this week and hit a new all-time high.
Chart courtesy of www.StockCharts.com
If I extrapolate the stock’s range within the last 11 months, I arrive at an intermediate target of $135.00 per share. With breakouts, resistance has now become Abiomed stock’s support level. Therefore, support lies between $110.00 and $105.00. As is always the case when shares hit new all-time highs, the sky is the limit for ABMD stock, as no overhead resistance exists.
The Bottom Line on ABMD Stock
What is not to love about a biotech company that saves lives, does so in a profitable way, and is self-sufficient?
Let me reiterate: it is not every day that I come across a gem like Abiomed stock. The sky truly could be the limit, making this biotech stock one to watch for interested investors.
The heart is a symbol of love and appropriately, that’s how I feel about a company like Abiomed.