SurModics, Inc. (NASDAQ:SRDX)

Here's Why You Should Invest in Surmodics (SRDX) Stock Now
[Zacks]
Zacks Equity Research
,Zacks•January 11, 2019

Surmodics, Inc. SRDX is expected to gain from strong growth in theIn Vitro Diagnostics (IVD)segment. Further, the company’s consistent efforts to boost research and development (R&D) functionalities buoy optimism.

Price Performance

In a year’s time, shares of this Zacks Rank #2 (Buy) company have surged 75.2%, against the industry’s 4.5% decline and the S&P 500 index’s fall of 6.6%.

Let us take a quick look at the factors that make Surmodics a solid pick for now.

IVD Segment Driving Growth

Surmodics’ performance continues to be driven by the IVD unit. For more than 35 years, the segment has been a leader in developing an ELISA/EIA, immunoblot/western blot, line assay or microarray.

In the fourth quarter of fiscal 2018, sales in the IVD increased 13.4% to $6.1 million. Per management, the segment saw strong growth in antigen and DNA slide sales in the quarter.

However, operating income in the segment was $2.4 million in the reported quarter, marginally down from the year-ago quarter’s tally. Notably, IVD revenues in the fourth quarter reflected strong growth in antigen and DNA slide sales.

Consistent Efforts to Boost R&D

Surmodics’ efforts to improve R&D stature are a key growth driver. The company’s whole product solutions pipeline and sirolimus-based below-the-knee DCB program deserve a mention here.

Fiscal fourth-quarter R&D expenses were $9.8 million, up 23.4% year over year. Considering the company’s strength in the R&D prospects, it has long-term goals of generating double-digit top line growth by the end of 2019 and EBITDA margins at or above 30% by fiscal 2021.

Which Way Are Estimates Treading?

For the first quarter of fiscal 2019, the Zacks Consensus Estimate is pegged at a loss of a penny, reflecting year-over-year decline of 101%. The same for revenues isat $18.9 million, marking 11.1% improvement year over year.

For fiscal 2019, the Zacks Consensus Estimate for earnings is pinned at 8 cents. For revenues, estimates are pegged at $93.3 million, indicating 14.8% rise year over year.

Surmodics, Inc. Price and Consensus

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