Should You Add Penumbra Stock to Your Portfolio Right Now?

Penumbra, Inc.’s PEN thrombectomy business is thriving, driven by growing sales of the U.S. vascular thrombectomy and CAVT (computer-assisted vacuum thrombectomy) line of products. The company anticipates strong early adoption of its computer-aided thrombectomy products in Europe, paving the way for wider international expansion. Sound financial health also bodes well for the stock. Meanwhile, adverse macroeconomic impacts and intense competition may pose operational risks for the company.               In the past year, shares of this Zacks Rank #2 (Buy) company have dipped 0.4% against the industry’s 7.3% growth and the S&P 500 composite’s rise of 21.8%.The global healthcare provider company has a market capitalization of $10.02 billion. PEN surpassed earnings estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 10.54%.Tailwinds for PenumbraRobust Thrombectomy Business Growth: Penumbra continues to see strong growth in its thrombectomy business, banking on the rapid increase in sales of the company’s vascular thrombectomy products in the United States as well as its CAVT line of products. In the third quarter of 2024, U.S. thrombectomy sales grew 21.2% year over year, driven by continued adoption and further market penetration of the current CAVT Portfolio, Lightning Flash 2.0 and Lightning Bolt 7. The U.S. VTE franchise delivered revenue growth of 32% year over year.Penumbra is actively working with regulatory and reimbursement bodies in Europe, Asia-Pacific and Latin America to bring the entire CAVT portfolio to patients internationally. The company expects to see a positive impact on its international thrombectomy business in 2025. Successful execution of this strategy will allow Penumbra to not only focus on sustaining long-term revenue growth but also increasing profitability.Image Source: Zacks Investment ResearchGlobal Expansion Continues: Penumbra generated nearly 28.5% of its revenues in the international markets in 2023 and expects to boost revenues and profitability in the next three years and beyond.  The company plans to bring its franchise products like RED catheters and CAT RX together with all its most advanced products, Lightning Flash, Lightning Bolt 7 and Thunderbolt, to its global teams. Internationally, Penumbra projects early success in Europe with the launch of its first-generation computer-aided products and aims to expand access to its most advanced thrombectomy products for its international vascular teams over the next few years.In terms of recent developments, the company received the CE Mark for Lightning Flash 2.0 and Lightning Bolt 7 in the third quarter of 2024 and is in the early phases of introducing the company’s transformative technology to European markets. Penumbra expects these to have a pronounced impact on its international growth in 2025.Stable Solvency Structure: Penumbra exited the third quarter of 2024 with cash and cash equivalents of $291 million compared with $340 million at the end of the second quarter of 2024. Meanwhile, total debt was $22 million, much lower than the corresponding cash and cash equivalent level. Also, it has no short-term payable debt on its balance sheet. This is good news in terms of the company’s solvency position, particularly during the global inflationary situation and supply delays.Downsides for PENMacroeconomic Concerns: Penumbra’s wide presence outside the United States makes its operations vulnerable to macroeconomic risks, including any disruptions to global trade resulting from any changes in trade agreements or tariffs.  Like its industry peers, the company is navigating worldwide geopolitical complications that have disrupted supply chains and labor markets, leading to cost escalation, raw material supply constraints and higher employee turnover rates in certain jurisdictions.In the third quarter of 2024, Penumbra experienced a decline in international revenues impacted by weakening sales in China as the company went from its licensing revenue model to the distribution model in this region.Tough Competitive Landscape: Penumbra operates in the highly competitive medical device industry, which is subject to rapid change and significantly affected by new product introductions and other market activities of industry participants. Large players like Boston Scientific, Medtronic and AngioDynamics have greater resources than Penumbra, enabling them to invest more in product development and marketing. The company also competes with several smaller medical device companies that have single products or a limited range of products.PEN Stock Estimate TrendsIn the past 30 days, the Zacks Consensus Estimate for Penumbra’s 2024 earnings has remained constant at $2.81.The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $1.19 billion, indicating a 12.5% rise from the year-ago reported number. Key MedTech StocksSome other top-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Veracyte VCYT and Quest Diagnostics DGX. Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 43.7% compared with the industry’s 14.4%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 27.06%. Its shares have surged 115% compared with the industry’s 15.5% growth in the past year.PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Veracyte, carrying a Zacks Rank #2 at present, has an estimated 2024 earnings growth rate of 138.2% compared with the industry’s 15.4%. Shares of the company have surged 54.4% compared with the industry’s 7.3% growth over the past year. VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 520.58%.Quest Diagnostics, carrying a Zacks Rank #2 at present, has an earnings yield of 5.87% compared with the industry’s 4.02%. Shares of the company have rallied 28.4% compared with the industry’s 14.8% growth. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.75%.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Quest Diagnostics Incorporated (DGX): Free Stock Analysis Report Phibro Animal Health Corporation (PAHC): Free Stock Analysis Report Penumbra, Inc. (PEN): Free Stock Analysis Report Veracyte, Inc. 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