Why AngioDynamics (ANGO) deserves a place on investors’ watchlist

The market reopening has created a conducive atmosphere to carry out elective medical procedures which were deferred on a large scale during the pandemic to facilitate proper COVID care. Despite the slowdown, medical device maker AngioDynamics Inc. (NASDAQ: ANGO) generated stable sales and earnings during the crisis, bringing fresh optimism to the healthcare technology market.

AngioDynamics is a market leader in minimally invasive medical devices, with focus on areas like surgery, vascular access, oncology, and peripheral vascular disease. Over the years, it has strived to develop disruptive technologies to support patients and professional healthcare providers. Right now, the company is busy expanding the addressable market for its products.

Stock Falls

The Latham-headquartered firm disappointed the market last week by reporting lower-than-expected earnings and revenues for the first quarter of 2023. Currently, the stock is trading at a two-year low after the post-earnings selloff aggravated the ongoing downtrend. But ANGO cannot stay at the present lows forever. Rather the company has what it takes to bounce back when normalcy returns, but it might take some time for a full-fledged recovery.

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AngioDynamics Inc. Q1 2023 Earnings Call Transcript

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The stock might look attractive to long-term investors and those looking to take advantage of the low valuation, but it would not be a good idea to sell it now. As of now, the company’s inability to stay consistently profitable would be the primary concern for its stakeholders, however, the management is optimistic about ending the year on a positive note.

Jim Clemmer, chief executive officer of AngioDynamics, commented while addressing analysts last week, “we remain committed to making the necessary investments designed to drive sustained growth in our Med Tech platforms while maintaining a balanced focus on the bottom line. Inflationary pressures persisted throughout our first quarter as freight and raw material costs continue to rise. While this pressure does have an impact on our results, I am pleased with how our supply chain team has managed through this dynamic environment.”

Weak Results

In the August quarter, a modest year-over-year decline in the Med Device segment was more than offset by double-digit sales growth in the Med Tech division, which resulted in a 6% rise in total revenues to $81.5 million. Meanwhile, the net loss, excluding special items, widened to $0.06 per share from $0.02 per share. The results missed estimates, extending the volatility experienced in recent quarters with regard to comparisons with analysts’ views.

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JNJ Earnings: Johnson & Johnson reports higher sales and adj. profit for Q2

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Earlier this year, the management outlined its three-year strategic plan and operating goals, with details of using the Med Tech platforms to enter large, fast-growing markets. Going forward, the focus of investments will be on expanding the Med Tech platforms. A few weeks ago, the FDA cleared expanded indications for AngioDynamics’ Auryon Atherectomy System, which is designed for the treatment of arterial occlusions.

Risks

Though the company has managed to ease the impact of supply chain issues, elevated inflation especially higher freight and raw material costs would continue to impact financial performance in the near term. Also, looming interest rate hikes and geopolitical tensions would remain a worry as far as growth is concerned.

The downbeat investor sentiment has weighed on ANGO’s performance and the stock is languishing far below its long-term average. It traded slightly above $15 on Monday afternoon.