Here's Why You Should Hold Surmodics (SRDX) Stock for Now

Core Viewpoint - Surmodics, Inc. (SRDX) is positioned for growth due to strong prospects in the thrombectomy business, driven by solid second-quarter performance and ongoing R&D efforts, despite concerns over regulatory challenges and reliance on third-party partnerships [1][2]. Financial Performance - Surmodics has experienced a decline of 4.8% year-to-date, contrasting with a 4.2% rise in the industry and an 11.6% increase in the S&P 500 [2]. - The company has a market capitalization of $493.68 million and projects a remarkable 97.2% growth for fiscal 2025 [2]. - Surmodics has consistently surpassed earnings estimates, with an average earnings surprise of 165.93% over the last four quarters [2]. Research and Development - The company has made significant investments in R&D, with expenses constituting 27.6% of total revenues in the second quarter [4]. - R&D efforts have focused on developing a pipeline of vascular intervention medical devices, including drug-coated balloons (DCBs), mechanical thrombectomy devices, and radial access devices [3]. Thrombectomy Business - Surmodics aims to leverage its proprietary Pounce thrombectomy platform technology, having launched two new mechanical thrombectomy systems during the fiscal second quarter [5][6]. - The company reported growth in product sales within the Medical Device segment, primarily due to the initial stocking order for the SurVeil DCB from Abbott and ongoing sales from the Pounce thrombectomy device platform [6]. Regulatory and Operational Challenges - Surmodics faces regulatory headwinds, as its facilities are subject to FDA inspections, which could impact its operations if non-compliance is found [8]. - The company's business strategy relies on licensing arrangements with third parties, making it vulnerable to the success of its licensees in developing and marketing products [9]. Estimate Trends - There has been a positive revision trend for fiscal 2024 estimates, with the loss per share narrowing from 90 cents to 72 cents over the past 30 days [10]. - The consensus estimate for third-quarter fiscal revenues is $30.3 million, indicating a 42.2% decline year-over-year, with an expected loss of 30 cents per share, widening by 157.7% year-over-year [10].