Why The Spectranetics Corporation Shares Burst Today

By Markets Fool.com

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

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What: Shares in TheSpectranetics Corporation tumbled by more than 20% earlier today after the company reported disappointing first quarter earnings after the bell yesterday.

So What: The maker of medical devices used in cardiovascular procedures reported sales of $57.4 million during the first quarter. The company also reported an adjusted net loss of $0.30 per share.

Although sales grew 45% from last year, the company's adjusted net loss was worse than the loss of $0.13 reported a year ago due to costs associated with new products. Revenue and earnings per share also missed analyst estimates by $2.8 million and $0.07, respectively.

Additionally, The Spectranetics Corporation issued guidance that was disappointing.

The company kept its forecast for sales growth of between 26% and 29% this year unchanged, but admitted that it's more likely that growth will trend toward the low end of this range.

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Its earnings guidance was even less inspiring. The company estimates that its net loss will be within a range of $78 million to $82 million, and that's worse than its prior estimate for a loss of between $58 million and $62 million.

Now What: The company's conservative sales forecast stems from increasing competition tied to the launch of new products that are vying for share against The Spectranetics Corporation's AngioSculpt.

Those introductions have led to the company reducing the low end of its outlook for AngioSculpt revenue from a forecast of between $62 million and $66 million this year to a range of between $59 million and $66 million this year.

Lower AngioSculpt sales and increased spending tied to the acquisition and integration of the Stellarex program, which was acquired from Covidien last fall, are behind the company's lowered profit guidance.

Overall, while patient demographics should support demand for cardiovascular procedures for years to come, investors may want to wait to see how the competitive picture develops and for the Stellarex headwinds to abate before stepping in and buying shares.

The article Why The Spectranetics Corporation Shares Burst Today originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.