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Penumbra (PEN): What Will Q1 Earnings Release Unveil?

Penumbra, Inc. PEN, a global interventional therapies company that went public on Sep 17 2015, is expected to report its first-quarter 2016 financial numbers on May 9, after the market closes.

Last quarter, the company had delivered a stupendous positive earnings surprise of 155.56%. Let’s see how things are shaping up prior to this announcement.


Factors at Play

We are impressed to note that Penumbra is an active player in the fast-growing interventional therapies space. In fact, the company’s products primarily cater to the unmet clinical needs across two major markets, viz. neuro and peripheral vascular.

The gradually increasing demand for treatment options in the heart diseases market reflects the high growth potential for the company in this niche. Attractive growth opportunities exist in the ischemic stroke market as well as in more established markets like hemorrhagic stroke and peripheral vascular. Accordingly, Penumbra’s strategy to focus on impactful product development across a varied portfolio earns investors’ confidence in the stock.

Worth mentioning is the company’s rising growth momentum with its neuro product line. Last quarter, growth was driven by sales of Penumbra System, which includes ACE and ACE64. Consistent with this, we expect a good show from neuro even in the to-be-reported quarter.

Within peripheral vascular, with the third full commercial quarter in the U.S. post the launch of larger sizes of Indigo, CAT6 and CAT8, the company is looking forward to achieve another quarter of progress.

Moreover, no interest bearing debt as yet in the company’s balance sheet makes the stock an attractive pick for investors.

However, the initial upward momentum that was seen in mechanical thrombectomy procedures in the ischemic stroke market post the MR CLEAN trial, may gradually stabilize.

Earnings Whispers

Our proven model does not conclusively show that Penumbra is likely to beat bottom-line estimates in the fourth quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP:  Penumbra has an Earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 6 cents.

Zacks Rank: Penumbra has a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

Quality Systems Inc. QSII, Earnings ESP of +6.25% and a Zacks Rank #2.

Chiasma, Inc. CHMA, Earnings ESP of +4.76% and a Zacks Rank #3.

Celsion Corp. CLSN, Earnings ESP of +4.35% and a Zacks Rank #3.

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QUALITY SYS (QSII): Free Stock Analysis Report
CELSION CORP (CLSN): Free Stock Analysis Report
PENUMBRA INC (PEN): Free Stock Analysis Report
CHIASMA INC (CHMA): Free Stock Analysis Report
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