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Are ABMD & DXCM Neck and Neck? Let's Take a Closer Look

Zacks

Medical Instrument companies Abiomed, Inc. ABMD and DexCom, Inc. DXCM are two solid contenders in the U.S. MedTech space, which is expected to reach a worth of $409.5 billion by 2023 at a CAGR of 4.5%. Notably, analysts believe that 2019 is likely to prove profitable for U.S. medical device companies, courtesy of the 2.3% Medical Device tax abatement along with focus on Artificial Intelligence and cybersecurity.

Against this backdrop, it is difficult to choose between the above-mentioned companies as they have similar business models. Making things more difficult, the scales apparently look balanced as Abiomed carries a Zacks Rank #2 (Buy), while DexCom sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

However, we make a detailed analysis of the companies’ fundamentals to determine which has a slight edge over the other.

Massachusetts-based Abiomed is engaged in developing, manufacturing and marketing medical products, designed to assist or replace the pumping function of the failing heart. Meanwhile, California-based DexCom is a medical device company focused on the design, development and commercialization of continuous glucose monitoring systems (CGM).

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Price Performance

Over the past year, Abiomed’s shares have gained 66.4% compared with DexCom’s 106.7% rally. The Medical Instruments industry has rallied 8.2% in the same time frame. Meanwhile, the S&P 500 index has declined 3.5%.

Which Way Are Estimates Headed?

Earnings

The Zacks Consensus Estimate for Abiomed’s current-quarter earnings per share stands at 93 cents, suggesting an improvement of 32.9% year over year. The same for DexCom is projected at 13 cents, showing year-over-year growth of 30%.

ABIOMED, Inc. Price and Consensus

 

ABIOMED, Inc. Price and Consensus | ABIOMED, Inc. Quote

Sales

The Zacks Consensus Estimate for Abiomed’s current-quarter revenues is pegged at $194.88 million, suggesting growth of 26.5% from the previous year. The same for DexCom is pegged at $283.08 million, reflecting a rise of 28.1%.

DexCom, Inc. Price and Consensus

 

DexCom, Inc. Price and Consensus | DexCom, Inc. Quote

What’s Favoring the Stocks?

Abiomed currently has a Growth Score of A. This reflects possibilities of outperformance over the long haul. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 or 2, are better picks than most.

Over the past four years, the company’s revenues have seen a CAGR of 37.2% to $594 million.

Abiomed raised its fiscal 2019 guidance, calling for revenues of $765-$770 million, showing an increase of 29-30% from the previous fiscal.

DexCom also has a Growth Score of A. Over the past four years, the company’s revenues have seen a CAGR of 40.5% to $719 million.

DexCom has also raised the 2018 guidance. The company expects revenues of $975 million against the previous projection of $925 million.

Other Key Picks

Other top-ranked stocks in the broader medical space are Stryker Corporation SYK and Surmodics, Inc. SRDX.

Stryker has a long-term expected earnings growth rate of 10% and a Zacks Rank #2.

Surmodics’ long-term earnings growth rate is projected at 10%. The stock carries a Zacks Rank #2.

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ABIOMED, Inc. (ABMD) : Free Stock Analysis Report
 
Stryker Corporation (SYK) : Free Stock Analysis Report
 
Surmodics, Inc. (SRDX) : Free Stock Analysis Report
 
DexCom, Inc. (DXCM) : Free Stock Analysis Report
 
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