Embecta (Nasdaq:EMBC) shares ticked up today on second-quarter results that topped the consensus forecast, leading to a guidance increase.
Shares of EMBC grew 2.1% to $29.52 apiece in early-morning trading today. MassDevice’s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — rose 0.1%.
The Parsippany, New Jersey-based diabetes technology company posted profits of $14 million. That amounts to per share on sales of $277.1 million for the three months ended March 31, 2023.
Embecta, which spun off from BD last year, recorded a bottom-line slide of 82.4% on sales growth of 0.9%.
Adjusted to exclude one-time items, earnings per share totaled 75¢. That landed 26¢ ahead of Wall Street projections. Sales topped expectations, too, with analysts looking for $262.9 million in revenue.
In a news release, Embecta also updated on the development of a closed-loop insulin delivery system with its proprietary patch pump. The system, designed to treat type 2 diabetes, holds FDA breakthrough device designation. Embecta said it entered into a collaboration agreement with Tidepool to leverage its FDA-cleared diabetes management software for the platform.
Embecta CEO Devdatt Kurdikar said the company’s second-quarter performance exceeded internal expectations.
“We remain focused on executing our three key strategic priorities: strengthening our base business, separating and standing up Embecta as an independent company, and investing for growth,” Kurdikar said. “During the second quarter, we made progress in each of these areas, as evidenced by our strong revenue performance; exiting additional transition service agreements with BD; and advancing our insulin patch pump program, including reaching an agreement with an innovative third-party algorithm developer.
“Given our financial performance during the first half of the year, coupled with our outlook for the remainder of the year, we are once again raising our guidance for our key financial metrics.”
Embecta increased both its sales and adjusted EPS guidance for 2023. It expects revenues between $1.103 billion and $1.113 billion. The company previously projected between $1.084 billion and $1.107 billion. Having previously set a range between $2.20 and $2.35, Embecta now expects adjusted EPS between $2.50 and $2.60.
The analysts’ view on Embecta
BTIG analysts Marie Thibault and Sam Eiber wrote in a report today that they maintain a “Neutral” view on Embecta. They believe Embecta management demonstrated a commitment to hitting margin targets while staying on schedule standing up the company on its own.
The analysts added that the Tidepool collaboration represents positive “incremental progress.”
“[Embecta] has created a strong earnings track record of beats and raises, but we remain at Neutral because the company’s EV/Sales, EV/EBIT, and P/E multiples look fairly valued when accounting for a flattish sales profile, expected near-term margin declines, and little detail on catalyst timing,” the analysts wrote.