IBD Stock Of The Day Shockwave Medical is cracking deeper into the calcium game, and taking SWAV stock to new highs.
The company has earned acclaim for its medical devices that use lithotripsy — the same technology that breaks up kidney stones — to "crack" hardened calcium in blood vessels. The process is called intravascular lithotripsy. It allows the vessel to relax and for blood flow to normalize.
Today, Shockwave is the only player in this arena. But Chief Executive Doug Godshall acknowledges competition is coming, likely in the 2025-26 time frame. Shockwave currently has four catheters that target calcium in different vessels. By 2025, he expects Shockwave to have six or seven.
"If and when competition ultimately does show up, we want to make sure customers are using even better versions of our products than they have today," Godshall said in an interview. "That makes it a lot less interesting for them to consider using somebody else's device."
SWAV Stock: Sales, Earnings Grow Bullishly
Shockwave's sales are on a bullish trajectory. During the June quarter, the company brought in $120.7 million in sales, growing almost 118% year over year. Similarly, adjusted earnings per share swung to a 68-cent gain, reversing from a 1-cent loss in the year-ago period.
Analysts following SWAV stock expect that trend to repeat in the current quarter. They project 67 cents per-share earnings on $124 million in sales. Earnings would soar 1,240% as sales rocket 90%.
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Godshall says Shockwave is now focusing on expanding its patient population. The company recently announced its plan to study coronary intravascular lithotripsy in an all-female study. The hope is to tackle some of the problems women often face with traditional calcium treatment, atherectomy. This involves using a drill to remove calcium from blood vessels.
Women tend to present symptoms of hardened calcium later than men. As a result, studies of calcium removal tend to feature fewer women. Those that do enroll are older and frailer than the men. But, a group of cardiologists noticed Shockwave had "remarkably strong" results in women during the firm's first study, Godshall said.
"Those cardiologists encouraged us to run a stand-alone female-only (study)," he said. The company hopes to "confirm what we observed in our pivotal (study)."
Branching Into New Geographies
SWAV stock investors are also watching Shockwave's efforts to expand into new territories. The firm is present in 61 countries. Shockwave is "just getting started" in China and moving into Japan, Godshall said. He describes the company's efforts as "present, but just scratching the surface."
The U.S. remains an important market, however. Shockwave's prices are higher in the U.S. where its catheters and generators receive insurance reimbursement. In general, the prices are lower abroad. Godshall says peripheral catheters cost around $3,000, with coronary catheters around $4,000. The generator they hook up to runs for less than $10,000.
He calls it the "razor blades, not razors" model of business. A customer will buy one generator, while the catheters are one-time use tools.
"As a percent of sales, a generator is a rounding error in the scheme of things," he said.
SWAV Stock Is Among Industry Leaders
Despite a broadly struggling market, SWAV stock ranks second in its Medical-Systems/Equipment industry group. The group itself ranks No. 25 out of 197 industry groups, putting it in the top 13% of all groups Investor's Business Daily tracks. In the medical sector, the equipment group trails only the biotech group, which ranks fifth.
Shockwave shares are now consolidating with a buy point at 315, according to MarketSmith.com. Its relative strength line is also at new highs.
But on the stock market today, SWAV stock retreated 2.1% to close at 279.18.
The stock also lands on three notable IBD lists: Tech Leaders, Stock Spotlight and the IBD 50. Bullishly, SWAV stock has a nearly perfect Relative Strength Rating of 98. This means shares have performed in the top 2% of all stocks over the past 12 months.
Shares also have a strong IBD Composite Rating of 96, which puts them in the leading 4% of all stocks when it comes to a group of key technical and fundamental measures, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
