CPTS Conceptus, Inc. (MM)

On May 20, 2013, we downgraded Thoratec Corp. (THOR) to Underperform based on its first quarter 2013 earnings results.

On May 2, Thoratec announced its results for the reported quarter. The company reported first-quarter 2013 adjusted earnings per share of 34 cents missing the Zacks Consensus Estimate of 40 cents.

Revenues dropped 7% year over year to $117.7 million in the first quarter, missing the Zacks Consensus Estimate of $123 million. Geographically, domestic sales dropped 11.2% year over year to $92.3 million, while overseas sales increased 10.9% to $25.4 million. By product, HeartMate sales dropped 7.9% to $102.9 million.

Thoratec’s competitor Heartware International Inc. (HTWR) received approval in Nov 2012 from the FDA for its Ventricular Assist System as a bridge to transplantation (BTT). Consequently, Thoratec has lost market share in the BTT market leading to revenue shortfall. However, there is no imminent competitive threat from HeartWare in the Destination Therapy (DT) segment, as its product is not expected to be launched in the near future.

Commercialization of next generation HeartMate III is still some time away and HeartWare is expected to close the gap. Thoratec continues to do well in international markets although the base is small. In April 2013, the company received reimbursement approval in Japan for HeartMate II as a BTT treatment.

Over the past month, the Zacks Consensus Estimate for 2013 has dipped 7.8% to $1.54. The Zacks Consensus Estimate for 2014 has gone down 9.6% over the same timeframe.

The stock carries a Zacks Rank #4 (Sell). We are more optimistic about Becton, Dickinson and Company (BDX) which carries a Zacks Rank #2 (Buy) and is expected to do well. In addition, Conceptus, Inc. (CPTS) carries a Zacks Rank #1 (Strong Buy) and warrants a look.

 
BECTON DICKINSO (BDX): Free Stock Analysis Report
 
CONCEPTUS INC (CPTS): Free Stock Analysis Report
 
HEARTWARE INTL (HTWR): Free Stock Analysis Report
 
THORATEC CORP (THOR): Free Stock Analysis Report
 
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