ev3 Downgraded – Analyst Blog

We have recently downgraded ev3 Inc. (EVVV) to Neutral with a target price of $16 based on a P/E of roughly 35.6x our fiscal 2010 EPS estimate of 45 cents. We downgraded the stock based on a downtrend in earnings estimates in the past 30 days. 

 

During the 30-day period, six out of ten analysts downgraded their earnings estimates while only three have upgraded theirs for the first quarter of fiscal 2010. For the second quarter, five out of ten analysts have downgraded their earnings estimates while only three have upgraded theirs.

 

For fiscal 2010, seven out of ten analysts downgraded their earnings estimates while only two have upgraded theirs. For fiscal 2011, four have downgraded while only one analyst has upgraded his earnings estimate out of a panel of ten. 

 

ev3 recently reported fourth quarter and full fiscal 2009 results. For the quarter, earnings per share were 12 cents, in line with the Zacks Consensus Estimate and higher than the year-ago loss of 2 cents. For fiscal 2009, earnings per share were 40 cents, higher than the loss of 45 cents in the year-ago quarter.

 

Excluding the Merck (MRK) research collaboration revenues, net sales increased 20% year over year to $126.8 million in the fourth quarter. Excluding a favorable foreign currency translation (FX), net sales increased 16% year over year.

 

Peripheral vascular sales increased 8% year over year to $73.7 million. Growth was led by higher demand for the company’s plaque excision, thrombectomy and embolic protection, and procedural support products. This was partly offset by lower revenues from stents.

 

Neurovascular sales increased 41% year over year to $53.0 million, buoyed by higher sales of embolic, and neuro access and delivery products.

 

ev3 reported a gross margin expansion of 870 basis points (bps) year over year to 75.9%. Sales, general and administrative expenses as a percentage of sales declined 330 bps year over year to 46.9%. Research and development expenses as a percentage of sales declined 20 bps year over year to 10.0%.

 

ev3 is a Plymouth, MN-based endovascular company that concentrates on catheter-based or endovascular technologies for the minimally invasive treatment of vascular diseases and disorders. The company’s acquired broad product portfolio focuses on applications in each of the three sub-markets of the endovascular device market (ev3) − peripheral vascular, cardiovascular and neurovascular.

 

ev3 competes in the endovascular market with a number of large companies like Boston Scientific Corp. (BSX), Medtronic Inc. (MDT), C.R. Bard (BCR), Cordis etc.