AngioDynamics' Reports Disappointing Q1 Results From Less Than Dynamic Competitor Performance

| About: AngioDynamics, Inc. (ANGO)

Shares of therapeutic and diagnostic devices maker AngioDynamics (ANGO) fell following the company’s disappointing preliminary first-quarter fiscal 2011 results which trailed Street expectations. The company is slated to release final results for the quarter with updated fiscal 2011 outlook on October 7, 2010.

Queensbury, New York-based AngioDynamics stated that it expects to post first-quarter revenues and earnings per share of roughly $51.5 million and 7-8 cents, respectively, which is below the current Zacks Consensus Estimate of $54.4 million and 10 cents. Following the announcement, the company’s shares fell $1.16 (or 7.6%) to $14.07 in after-hours trading on September 7.

As per the preliminary results, Oncology/Surgery sales rose approximately 22% year-over-year in the quarter to $15.6 million. However, Peripheral Vascular revenues edged down 1% to $20.7 million while Access sales dipped 6% to $15.2 million. The company attributed the decline to a slowdown in procedure volume in specific US markets and pricing pressure.

AngioDynamics posted solid revenue and profit growth in fourth-quarter fiscal 2010, boosted by healthy growth across Peripheral Vascular and Oncology/Surgery divisions. Higher demand for the company’s popular NanoKnife IRE system (for treating tumors) fueled a 35% year-over-year growth in Oncology/Surgery sales.

AngioDynamics has market leading positions in several of its operating segments including angiographic products and thrombolytic catheters and products. The company continues to broaden its product portfolio while it is actively pursuing cost management to offset margin erosion due to intense price competition.

We expect AngioDynamics’ focus on interventional peripheral to help drive future growth. The company should continue to benefit from the ongoing shift from open surgery to less invasive interventional procedures.

However, AngioDynamics’ product lines face strong challenges from the competitive offerings of its larger rivals such as, Boston Scientific (BSX) and C.R. Bard (BCR). Moreover, the company’s Vascular Access division remains affected by pricing pressure which offset growth in unit volumes of major products. We currently have a Neutral recommendation on AngioDynamics.

Disclosure: No position