Embecta (Nasdaq:EMBC) shares rose significantly today on third-quarter results that came in well ahead of the consensus forecast.
Shares of EMBC ticked up 14% to $16.39 apiece in early-morning trading today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — rose slightly.
It’s the second recent boost for Embecta’s stock, which skyrocketed amid rumors of the company exploring a sale last month.
The Parsippany, New Jersey-based pure-play diabetes company reported profits of $14.7 million. That equals 25¢ per share on sales of $272.5 million for the three months ended June 30, 2024.
Embecta recorded a 3.3% bottom-line slide on a sales decline of 4.8%.
Adjusted to exclude one-time items, earnings per share came in at 74¢. That landed 28¢ ahead of expectations on Wall Street. Sales also topped estimates as experts forecast $267.4 million in revenue.
“During the third quarter our business performed in alignment with our expectations. We generated strong gross, operating and EBITDA margins even as revenue was impacted by the expected timing of customer orders that had positively impacted our second quarter results,” said Devdatt (Dev) Kurdikar, Embecta CEO. “From a year-to-date perspective, our financial results demonstrated the continued resilience and stability of our business.”
“Additionally, I’m proud of the significant strides we have made as an organization in advancing our strategic priorities, including the transition to our own enterprise resource planning (“ERP”) system, shared service capability and distribution infrastructure, which is now complete in most regions of the world. Furthermore, we made progress on our 510(k) application for the open-loop patch pump program. Lastly, given the strong year-to-date performance, coupled with our outlook for the remainder of the year, we are once again tightening and raising our fiscal 2024 outlook for certain financial metrics.”
Embecta maintained its 2024 sales guidance for between $1.111 billion and $1.116 billion.
The analysts’ view on Embecta
BTIG analysts Marie Thibault and Sam Eiber point out that Embecta “breezed past estimates and guidance for margins.”
They wrote that the company’s core injection business remains stable, while favorable pricing in the U.S. helped on the sales front. One offset came by anticipated volume declines as U.S. distributors normalized inventory levels.
Additionally, the analysts say they expect more developments on the patch pump program at Embecta during a December investor day event. Embecta is also planning to sell a small pack of pen needles for GLP-1 users in Germany, with expansion to more countries after.
The analysts maintained their “Neutral” rating for the company.
“Despite a dynamic market facing external pressures, Embecta has managed to keep revenue stable and outperform on margins for several quarters in a row,” the analysts wrote. “We remain on the sidelines as we await clarity on the timing of needed investments for the planned T2D patch pump program and impact to margins.”
