Perilous Reversal Watch: Abiomed (ABMD)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Abiomed ( ABMD) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Abiomed as such a stock due to the following factors:

  • ABMD has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $48.5 million.
  • ABMD has traded 88,511 shares today.
  • ABMD is down 3.7% today.
  • ABMD was up 15.9% yesterday.

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More details on ABMD:

ABIOMED, Inc. provides medical devices in circulatory support and continuum of care in heart recovery to acute heart failure patients. ABMD has a PE ratio of 148.0. Currently there are 4 analysts that rate Abiomed a buy, 1 analyst rates it a sell, and 4 rate it a hold.

The average volume for Abiomed has been 500,400 shares per day over the past 30 days. Abiomed has a market cap of $2.7 billion and is part of the health care sector and health services industry. The stock has a beta of 1.36 and a short float of 12.8% with 4.77 days to cover. Shares are up 71.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Abiomed as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 0.8%. Since the same quarter one year prior, revenues rose by 34.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ABMD has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.52, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 188.7% when compared to the same quarter one year prior, rising from $4.39 million to $12.68 million.
  • Net operating cash flow has significantly increased by 79.01% to $15.13 million when compared to the same quarter last year. In addition, ABIOMED INC has also vastly surpassed the industry average cash flow growth rate of -10.86%.
  • The gross profit margin for ABIOMED INC is currently very high, coming in at 85.10%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 20.45% trails the industry average.

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