Why Cyberonics' Shares Popped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of implantable-medical-device maker Cyberonics (NAS: CYBX) popped as much as 12% today after the company reported better-than-expected second-quarter results and raised its full-year outlook.
So what: For the quarter, Cyberonics reported a 17% jump in revenue to $63 million as profits jumped 36% from the year-ago period to $0.44 per share. Both figures easily surpassed the $59.95 million in sales and $0.39 in EPS that Wall Street had been anticipating. Cyberonics attributed its growth to record U.S. unit sales, as well as double-digit European growth and increased shipments to Japan. Furthermore, the device maker boosted its full-year sales and EPS forecast. Cyberonics now expects net sales in the range of $246 million-$249 million and EPS of $1.56-$1.62 compared to its own previous guidance of $241 million-$244 million in sales and EPS of $1.49-$1.59.
Now what: This was a great quarter for a company that admittedly has some very exciting products targeting the vagal nerve. Despite the upped guidance, I still remain leery about 2013 for a number of reasons. European spending isn't looking good, and the medical device excise tax is set to start taking a 2.3% bite out of Cyberonics' bottom line next year. This may seem like pocket change, but at 32 times forward earnings, that's a hefty price to pay with so many question marks still on the table.
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The article Why Cyberonics' Shares Popped originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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