The Great Abiomed (NASDAQ: ABMD) Comeback Continues

Back at the start of May, we wrote about how shares of Abiomed (NASDAQ: ABMD) were working hard to prove the bears wrong and to break a two-year downtrend. In the eleven weeks since then, they’ve tacked on an impressive 55%, are firmly above their pre-COVID levels and show no signs of slowing down.

That puts them a full 130% higher than their March lows and into the upper bracket of top-performing stocks in the post coronavirus landscape. The company’s banner product, or rather family of products, is Impella, various versions of a tiny heart pump that offer blood flow support to patients. With the onset of COVID, all non-essential treatment was canceled as part of the effort to slow the spread of the virus and to free up medical resources to focus on coronavirus patients instead. The standard Impella user was told to hold tight and make do until COVID was under control.

Abiomed Doomsday Scenario Avoided

Abiomed’s revenue’s dependence on Impella made it particularly vulnerable to the worst-case scenarios that were being drawn up and imagined in the early days of the pandemic. With non-COVID patients basically being turned away from hospitals, where was the company going to generate revenue? This attitude helps to explain the 40% drop in a single month that shares experienced through March. However, as the infamous curve has been flattened in many countries and economies have started to reopen, the doomsday scenarios have not come to pass.

Downward pressure on the shares has been lifted as a result and the subsequent uplift has been supported by the company’s recent acquisition of Breethe. This Maryland health startup manufactures a kind of artificial lung which assists patients whose own lungs are struggling with the likes of coronavirus. Being able to staple a revenue-generating product that’s in hot demand into their portfolio has been a winning move by management.

Wall Street will be watching their upcoming earnings report closely to see just how well Impella’s revenue has bounced back and how strong the Breethe business line has been performing. Recent updates from the FDA have been promising and are no doubt adding to the general hype.

Last week, they approved digital data streaming from an Impella device to a central server where artificial intelligence can go to work on behalf of doctors. In June, the FDA gave the nod on the first-in-human study of one of the Impella heart pumps in high-risk percutaneous coronary intervention patients. That same week, another version of the pump was approved for emergency use for the treatment of hospitalized COVID patients who were experiencing heart failure.

Abiomed Looking Ahead

If the narrative after the company’s last earnings report was that COVID hadn’t hurt the company’s revenues as much as expected, the narrative going into the next is sure how much did COVID benefit them. Their addressable market has increased, their exposure to COVID-19 has turned into a net positive and investors are expecting them to continue to make hay while the sun shines.

Even with RSI around 75, it’s hard to say that shares are looking stretched at current levels. They’re just starting to reverse a downtrend that took 75% off their value from September 2018 through March 2020, so there’s plenty of catchup to be done yet. They’ve a solid uptrend supporting the current run that interested investors can use to time entry or plan an exit.

Depending on what comes out in the next earnings report, due in a fortnight, we could well be writing another piece entitled “The Great Abiomed Comeback Is Complete” in the near future.