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Here's Why You Should Retain Surmodics Stock in Your Portfolio Now
SRDXSurmodics(SRDX) ZACKS·2025-03-18 11:50

Core Insights - Surmodics, Inc. (SRDX) reported a strong performance in the last quarter, with a loss per share that was 51.9% narrower than market estimates and sales exceeding estimates by 8.3%, driven by solid prospects in the thrombectomy business [1][3] - The company is likely to be acquired by GTCR for an estimated total equity valuation of 627million,withthedealexpectedtoclosebytheendofMarch,potentiallyofferingdouble−digitreturnsforinvestors[2][5]−Surmodicshasamarketcapitalizationof627 million, with the deal expected to close by the end of March, potentially offering double-digit returns for investors [2][5] - Surmodics has a market capitalization of 404.58 million and projects a remarkable 162.5% growth for fiscal 2025, maintaining a strong performance trajectory [3] Acquisition Details - Surmodics entered into a definitive agreement in May 2024 to be acquired by GTCR, with shareholders set to receive 43.00pershareincash[5]−TheacquisitionfaceschallengesastheFTChasblockedthedealduetoanti−competitiveconcerns,promptingSurmodicstoconsiderlegalactionagainsttheFTC[5][11]FinancialPerformance−SurmodicsdemonstratedsolidimprovementinbothtopandbottomlinesforQ1offiscal2025,withnotableincreasesinperformancecoatingsroyaltyrevenuesandsalesfromthePouncethrombectomydeviceplatforms[8]−Thegrossmarginexpansionisapositiveindicatorforthestock,despitesomesegmentalsalesdeclinesattributedtounfavorableordertiming[10]ThrombectomyBusinessProspects−ThecompanyaimstoleverageitsproprietaryPouncethrombectomyplatformtechnology,withearlyresultsfromastudypresentedattheTCTSymposiumandFDAclearanceforthePounceXLThrombectomySystem[7]−Limitedmarketevaluationsoftheproductareexpectedtogenerateadditionalrevenuesduringfiscal2025[7]EstimateTrends−Surmodicsisexperiencingapositiveestimaterevisiontrendforfiscal2025,withtheZacksConsensusEstimateforearningspershareimprovingby1centto19cents[13]−TheconsensusestimateforQ2fiscal2025revenuesisprojectedat43.00 per share in cash [5] - The acquisition faces challenges as the FTC has blocked the deal due to anti-competitive concerns, prompting Surmodics to consider legal action against the FTC [5][11] Financial Performance - Surmodics demonstrated solid improvement in both top and bottom lines for Q1 of fiscal 2025, with notable increases in performance coatings royalty revenues and sales from the Pounce thrombectomy device platforms [8] - The gross margin expansion is a positive indicator for the stock, despite some segmental sales declines attributed to unfavorable order timing [10] Thrombectomy Business Prospects - The company aims to leverage its proprietary Pounce thrombectomy platform technology, with early results from a study presented at the TCT Symposium and FDA clearance for the Pounce XL Thrombectomy System [7] - Limited market evaluations of the product are expected to generate additional revenues during fiscal 2025 [7] Estimate Trends - Surmodics is experiencing a positive estimate revision trend for fiscal 2025, with the Zacks Consensus Estimate for earnings per share improving by 1 cent to 19 cents [13] - The consensus estimate for Q2 fiscal 2025 revenues is projected at 33 million, indicating a 3.3% increase from the previous year [13]