ABMD Stock Forecast: The Potential Amidst COVID-19

The ABMD stock forecast article was written by Jessica Kremer – Analyst at I Know First.


  • The company was off to a rocky start in 2020 due to false negative press revolving around their Impella RP heart pump.
  • ABMD acquired Breethe, a company which develops extracorporeal membrane oxygenation (ECMO) systems. This product serve the needs of patients whose lungs can no longer provide sufficient oxygenation. It will complement and expand Abiomed’s product portfolio. 
  • In their Q4 report, ABMD stock experienced a 15.3% increase in price, the stocks largest intraday gain in almost five years.
  • Despite their overvaluation, because of their market potential due to COVID-19, I give this stock a buy rating.
Source: NASDAQ

Recent News and ABMD Stock Decline

The decline in the stock could be seen around February. This correlates to the FDA informing cardiologists and patients that a new study demonstrated a higher mortality rate than previously thought. Three months later, the FDA released another statement clarifying this. They stated that the lower survival rate applied to patients who wouldn’t have qualified for the clinical studies.

Despite this negative press, the company has participated in numerous studies that have established the safety of their product. Recently, a press release discussed how Impella reduced in-hospital mortality when placed before a non-emergent percutaneous coronary intervention (PCI). In their earnings report, the company stated that “the Impella RP is the first percutaneous single access heart pump designed for right heart support to receive FDA approval.” Other than IABP which was invented in the 1960’s, Impella is the only other treatment for cardiovascular issues. This then demonstrates the strong future earning potential for the company. 

Why ABMD Stock is Overvalued

Looking at the revenue for each industry, we can see that ABMD has the lowest revenue of the industry, coming in at 840.88 million.  Despite their drastic difference in revenue and revenue per share, the company holds the second largest P/S ratio in the industry. This implies the stock is overvalued, as its market value is much greater than the sales per share. 

The negative EPS diluted implies that the company has negative earnings and is losing money. Due to this, it would be wiser to sell the stock.   

Furthermore, the high PEG non-GAAP (FWD) of 4.18 also implies that the stock is overvalued. ABMD P/E non-GAAP (FWD) is one of the lower statistics in the industry, at 58.49. Due to this, the high PEG stems from lower anticipated EPS growth, thus demonstrating the over-evaluation of ABMD stock.  

Source: Seeking Alpha

ABMD Stock Expectations

The company holds a strong balance sheet. According to their press release, the company generated an operating cash flow of $314.9 million in the fiscal year 202. In addition, on March 31, 2020, the company had “$650.9 million of cash and marketable securities and no debt.” ABMD has not had any debt for the previous five years. 

Source: SimplyWall.St

Furthermore, with the acquisition of Breeth and the current respiratory-virus pandemic, the company may expect to receive gains in future. In a press release, the ABMD stated that the product is a novel design that is easy for healthcare providers to set up, manage, and monitor. This compact ECMO system also eliminates the need for bulky oxygen tanks, demonstrating strong earning potential. This device, could provide an alternative to ventilators and allow lung failure patients to remain ambulatory and able to go home during treatment. The company can expect for this acquisition to pay off, especially due to the current pandemic. The device could enable severely ill COVID-19 patients to return home.

A post regarding their fourth quarter earnings displayed ABMD to have a 15.3% increase, the stocks largest intraday gain in almost five years. Many investors are confident in the future increase of stock price, with them producing strong buy recommendations. Impella product revenue in the US for this quarter totaled $164.0 million, a decrease of 3% compared to revenue of $169.7 million during the same period in the prior fiscal year. The company estimated U.S. patient usage of the Impella was down 5% primarily due to COVID-19, accounting for this decrease.

Below is I Know First’s forecast for ABMD. The forecast demonstrates the probability of growth for the stock, prompting the buy verdict.


Finbox’s DCF analysis gives ABMD a fair value of 113.03, drastically lower than its market value. 

Source: FinBox

I also tested the DCF fair valuation algorithm of SimplyWall.St. This site gives ABMD a fair value price of $128.76. This number is similar to the one provided by Finbox, with both fair values being drastically lower than the current price. SimplyWall.St uses a 2 Stage Free Cash Flow To Equity model in its fair value calculation.

Source: SimplyWall.St

Despite the current negative growth estimates the company anticipates a large growth estimate for the next year. This, combined with the current market growth from economy reopenings, strengthens the buy argument.

Source: Yahoo Finance

Past I Know First Success with ABMD Stock Prediction

I Know First algorithm made a bullish ABMD stock forecast on May 27, 2020. As shown below, during the time period from April 26th, 2020 to May 31th, 2020, ABMD has already grown by 32.86%. This confirmed I Know First’s ABMD stock forecast.

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