Why Cardiovascular Systems Shares Surged

Why Cardiovascular Systems Shares Surged

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 medical device company Cardiovascular Systems popped 10% today after its quarterly results and guidance topped Wall Street expectations.

So what: The stock has soared over the past year on solid operating momentum, and today's Q4 results -- net loss widened to $6.8 million, but revenue surged 26% -- coupled with upbeat guidance for the current quarter, only reinforce that trend. Demand for its Stealth 360deg peripheral arterial disease (PAD) System remained particularly healthy, with re-orders accounting for 96% of total revenue, giving analysts plenty of good vibes over the recurring nature of the business model.

For the first quarter, management expects a per-share loss ranging from $0.39 to $0.42 on revenue growth of 18% to 22%. "Our fiscal 2014 focus is twofold: We will continue to prepare for a coronary launch, making growth investments as appropriate, while driving clinical and educational initiatives for further PAD adoption," said CEO David Martin. With the stock now up about 165% from its 52-week highs, and trading at a price-to-sales multiple of five, however, much of that growth might already be baked into the price.

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