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Cardica Set To Recover From Post-Earnings Plunge

|Includes: Dextera Surgical Inc. (DXTR)

Cardica, Inc. (NASDAQ: CRDC) is a medical instruments and supplies company focused on the design, manufacture and marketing of proprietary automated anastomotic systems for coronary bypass surgery. The company has refocused and expanded its business by stressing the development of a laparoscopic microcutter product line anticipated for use by bariatric, thoracic, colorectal and general surgeons. It is developing a microcutter product line based on its proprietary "staple-on-a-strip" technology.

While Cardica seems to have a promising future based on its product pipeline, its immediate past has not been as impressive.

Stock Plunges after Earnings Report

On May 1, Cardica reporting its Q1, 2013 results which missed analyst's estimates. The company's stock responded in kind after it plunged from a high of $1.11 to close at $0.95 per share within one week. However, over the last few days there has been some signs of recovery as the stock recouped some 3 cents to close at $0.98 on May 13, before sliding back to $0.95 per share.

The company's net revenue for the nine months ended March 2014 remained unchanged from last year, at about $2.6 million. However, net loss for the three-month period soared to $4.4 million or $0.09 per share, compared to last year's 3.9 million, or $0.10 per share.

For the nine-month period ended March 31, the company's operating expenses and net loss came in line with last year's figures, at $14.5 million versus $14.6 million and $12.3 million respectively.

Research and development expenses of the company were around $1.7 million for the third quarter of fiscal 2014, compared to the $2.0 million for the same quarter last year.

Recovery on the Way

Looking at the recent financial results it is quite evident that Cardica has underperformed and it may appear as though it is unlikely to recover from its post-earnings plunge. However, with its commercial introduction of the MicroCutter XCHANGE® 30 in Europe the company is eyeing opportunities to augment its revenue streams in other business segments.

The company is also working with key consultants in the United States to secure approval for its MicroCutter XCHANGE® 30 evaluation and purchasing through multiple hospital value analysis committees.

Furthermore, the company's recent public offering has solidified its balance sheet and it now has enough funds to finance new product launches and marketing campaigns. This will also bolster its ability to implement a succesful U.S. product introduction and product line expansion in the coming months.


Cardica appears to be showing signs of improvement, but it could still be too early to make conclusive remarks about the company's immediate future. Nonetheless, based on analyst's ratings, it appears as though Cardica is finally gaining the right sympathizers as it seeks to make a u-turn that could put smiles on shareholders' faces.

Analysts now are rating the stock at neutral from a previous sell rating, which is a rare upgrade for the medical devices and services company. This indicates that the company could be set to recover from the recent plunge; or perhaps the plunge was unwanted.