Thursday, October 30, 2008

Thoratec (THOR) Smashes Earnings; Somehow Guides Up

As I expected Thoratec (THOR) demolished earnings expectations as this quarter's sales came before the product recall of their heart device. What boggles me is they have the confidence to increase full year guidance. In full disclosure I did not listen to the conference call nor do I have access to analyst reports so I don't know the full details of the recall but it sounded pretty serious on first glance. So while the results were expected to be strong this quarter, I'm surprised how adament they are on guidance. I see no further details in the press release on the recall. The stock in after hours is up 10% and right back to where it was ($24s) the trading session before the recall was announced.

I'll admit being confused by this one; will have to find some time to listen to the conference call to get a take on why the bad news of last week has been brushed to the side. My main beef here is lack of long term visibility on Heartmate II; hopefully this was just a big pothole that was quickly corrected but who knows and in this market with so many cheap valuations there doesn't seem to be a great reason to risk capital on a story with so many questions at this point. But maybe we'll revisit some day down the road as this product seems to have a high uptake among doctors.
  • Cardiac device maker Thoratec Corp (THOR) posted quarterly results that topped market estimates, helped by strength in its heart device HeartMate II LVAS, and raised its full-year outlook for the second time in less than three months.
  • Reports Q3 (Sep) earnings of $0.17 per share, $0.07 better than the First Call consensus of $0.10; revenues rose 44.0% year/year to $80.8 mln vs the $69.4 mln consensus.
  • The company said its implanted heart pump HeartMate II LVAS helped generate a 68 percent rise in revenue at its cardiovascular division, and it added 17 new HeartMate II centres in the quarter.
  • Looking ahead, the company now sees earnings of 54 cents to 59 cents a share and revenue of $302 million to $308 million for fiscal 2008. In August, it had raised its full-year outlook and had forecast earnings of 47 cents to 52 cents a share, before items, on revenue of $285 million to $295 million
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