Why Did AngioDynamics Pop 9% Despite Mixed Q3 Results?

AngioDynamics (NASDAQ: ANGO) shares gained 9% on April 7, after the company delivered mixed fiscal third-quarter results, but reiterated its FY2022 guidance well above analysts’ expectations.

Despite ongoing supply chain disruptions, procedural volume challenges and rising inflation, investors cheered the fact that the company managed to report a significant earnings beat.

AngioDynamics, Inc. is a leading medical technology company that provides industry-leading medical devices used around the world for the treatment of cancer and peripheral vascular disease.

Q3 Numbers

Adjusted earnings of $0.03 per share significantly beat analysts’ expectations of a loss of $0.01 per share. The company reported earnings of $0.02 per share for the prior-year period.

However, net sales jumped 3.9% year-over-year to $74 million, but lagged consensus estimates of $76.32 million.

The increase in revenues reflected a surge in Med Tech revenues, which increased 28.6% to $19.6 million, partially offset by a 2.8% decline in Med Device revenues.

On the downside, gross margin declined 190 bps year-over-year to 52.2% due to a tight labor market as well as higher raw materials, labor, and freight costs.

FY2022 Outlook

Based on robust Q3 earnings, management maintained financial guidance for FY2022.

The company continues to forecast adjusted earnings in the range of ($0.02)- $0.02 per share, while the consensus estimate is pegged at a loss of $0.01 per share.

Further, net sales are forecast to be in the range of $310 million to $315 million, against the consensus estimate of $313.7 million.

CEO Comments

AngioDynamics CEO, Jim Clemmer, commented, “Since mid-February, we have seen steady improvement in procedure volumes and remain confident in both the long-term growth trajectory of our portfolio and the strategic transformation of the Company.”

Analysts Recommendation

Consensus among analysts is a Moderate Buy based on two unanimous Buys. The average AngioDynamics price target of $33 implies 40.49% upside potential to current levels.

Conclusion

Beating the macro headwinds, AngioDynamics continued on its capacity enhancement initiatives, increasing its production hours by 20% during the quarter.

Management confidence was on full display with an earnings outlook ahead of the street. Furthermore, a robust backlog as well as persistent demand bode well for the stock in the coming months.

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