Surmodics Shares Decline

Surmodics, a leading provider of surface modification technologies, saw its shares decline by 10% to $31.68 following its latest quarter results. Analysts believe that this drop is a result of the high expectations that investors had coming into the quarter.

Over the past year, the stock has seen an impressive 11% increase.

For fiscal year 2024, Surmodics expects its revenue to fall between $117 million and $121 million, representing a decrease of 9% to 12% compared to fiscal year 2023. Additionally, the company forecasts an adjusted loss between 87 cents and $1.17 per share. Previously, Surmodics had projected revenue between $116 million and $121 million, with an adjusted loss per share ranging from 97 cents to $1.32.

The decline in Surmodics' stock can possibly be attributed to investors' expectations surrounding the SurVeil drug-coated balloon, a treatment developed by the company for peripheral artery disease. Analyst Mike Matson from Needham suggests that investors may have had unrealistic expectations for the initial success of SurVeil. Despite this setback, Matson remains optimistic about SurVeil's potential to drive growth for Surmodics in the future, acknowledging that it might take a few more quarters to gain significant traction.

In the first quarter, Surmodics experienced strong sales driven by the fulfillment of Abbott Vascular's initial stocking order for SurVeil DCB, as Abbott serves as the exclusive distribution partner for the product. However, management anticipates lower orders and shipments to Abbott in the second quarter, which could impact their guidance for that period.

While investors may be disappointed with Surmodics' outlook for the rest of the year, it is important to recognize that the success of SurVeil cannot be fully assessed within the first month. Despite this, SurVeil still has the potential to be a significant growth driver for Surmodics in the long run.