Abiomed Stock Forecast [First Artificial Heart?]

Abiomed Stock Forecast: Heart disease is the leading cause of death in the United States. When the heart is unable to pump blood through the body, oxygen-starved cells can’t do their jobs. Organs fail, and overtaxed systems shut down – sometimes in a matter of minutes.

Fortunately, advanced medical interventions are increasing the likelihood of living through acute heart-related incidents. Firms like Abiomed are hard at work on perfecting heart disease treatments. These are just a few of the devices, procedures, and therapies available to today’s heart disease patients:

Supporting Heart Function 

Myocardial Infarctions, better known as heart attacks, may be the most-referenced heart condition in popular culture, but the list of diseases affecting heart function is longer and more diverse. For example, heart failure and cardiogenic shock are separate conditions that can lead to death without fast medical intervention.

Researchers in government agencies, academic institutions, and private-sector businesses are developing new methods of managing heart disease. They are exploring options for predicting and preventing heart conditions, and they are designing more effective interventions to increase the chances of survival after a serious incident.

Sometimes, these therapies include a combination of medications designed to support heart function. Unfortunately, that’s not always enough to prolong life. In such cases, the heart might require support from an internal medical device to function efficiently.

Examples of such devices include Implantable Cardioverter Defibrillators (ICDs) and pacemakers to promote normal heart rhythms, as well as Left Ventricular Assist Devices (LVADs) to support the heart’s ability to pump an adequate amount of blood.

The biggest drawback to LVADs is that they require invasive open-heart surgery, making them less desirable for patients who only need support short-term while the heart muscle recovers from an acute incident, like a heart attack.

In these situations, most cardiologists choose an intra-aortic balloon pump (IABP) instead. These devices are put in place through a vein in the leg, and they are removed the same way. Of course, such devices have drawbacks of their own, and researchers continue to explore alternatives.

Abiomed [NASDAQ: ABMD] released an advanced line of heart pumps under the brand name Impella, and investors immediately got on board.

Abiomed share price rose dramatically, prompting others to wonder whether Abiomed stock belongs in their own portfolios. Will the company continue to grow and generate value for shareholders, or has it already peaked? In other words, is Abiomed stock a buy?

Can Abiomed Create An Artificial Heart?

A poorly-functioning heart destroys quality of life, leaving patients exhausted and unable to enjoy their favorite activities.

Though medications and devices like IABP have been around for decades, they aren’t perfect solutions. When they do work, they carry risks of serious side effects, and they don’t solve the biggest problem of all: what to do when damage to the heart is so severe that existing devices aren’t enough?

Heart transplant is an option, but there simply aren’t enough healthy organs for everyone who needs them. At any given moment, there are between 3,500 and 4,000 people on the heart or heart/lung transplant list, and more than 25 percent don’t live through the wait.

Abiomed [NASDAQ: ABMD] is focused on reducing mortality rates among patients whose hearts aren’t functioning properly.

The company is working to improve existing medical devices by making them smaller, more effective, and easier to put in place.

Even more exciting, Abiomed is deep into development of an implantable device that can perform all of the heart’s functions long-term. In fact, creating an artificial heart is Abiomed’s primary goal, established when the company was founded in 1981.

So far, Abiomed’s biggest success has been its Impella heart pumps. The devices were released in 2008, and in 2015, they received FDA approval for both elective and urgent, high-risk Percutaneous Coronary Intervention (PCI – formerly known as angioplasty with stent) procedures.

What Makes Abiomed Heart Devices Different?

Impella heart pumps have a number of benefits over their more traditional IABP peers.

One notable advantage is that traditional IABPs rely on the force of heartbeats to function, while Impella devices independently pump up to 2.5 liters of blood per minute. Relying on a damaged heart to ensure IABP effectiveness has always been a problem, and Abiomed has found the solution.

More importantly, Impella 2.5 and Impella CP heart pumps have the distinction of being the only percutaneous temporary ventricular support devices approved for use in patients with high levels of risk.

That means more choices for the sickest patients who won’t survive invasive surgeries. However, these benefits don’t come without risks of their own, and new research has patients and physicians rethinking how they balance the pros and cons.

For investors, the issue is whether the risks of Impella devices outweigh the potential benefits for patients. If so, is Abiomed stock a smart buy?

What are the Risks of Buying Abiomed?

Long-term Abiomed [NASDAQ: ABMD] investors have had a rough go of things. In June 2017, shares were trading around $143. Good news from the FDA drove stock prices up to $443 in June 2018, but by June 2019, they were down to about $250. The following months brought more losses, and today shares trade closer to their June 2017 price. In short, they dropped a total of 40 percent since the start of 2019.

November 2019 was a particularly difficult month, after the results of two studies were released at the American Heart Association’s Scientific Sessions in Philadelphia. The research identified serious risks to patients who were given Impella devices over traditional IABPs.

Specifically, the studies noted that these patients were far more likely to experience acute kidney injury, bleeding, stroke, and death following the procedure.

The risk of stroke went up by 34 percent, and the risk of death went up by 24 percent.

After this announcement, Abiomed’s share prices dropped 20 percent, practically overnight, despite the company’s assurances that its own study results were based on more robust research with greater scientific validity.

Abiomed pointed out that its own results demonstrated 58 percent lower mortality rates and lower treatment costs for Impella patients versus IABP patients, which puts investors in a tricky position.

Whose data is accurate? More importantly, does the truth about Impella’s risks even matter? The alarming headlines have spooked patients and practitioners, and it is hard to say whether demand for Abiomed’s devices will recover. So what is the current Abiomed stock forecast?

Is Abiomed Stock a Buy?

Abiomed’s financials remain strong, at least in the short-term, despite the drop in Impella sales. Revenue is growing, and the company is producing solid profits.

Better yet, the FDA sent a letter to providers detailing the reasons that the two American Heart Association Scientific Sessions studies were flawed.

In particular, the letter noted that those studies included patients who were given Impella devices despite the fact that they didn’t meet Abiomed’s eligibility criteria.

Overall, most analysts have indicated that they expect Abiomed to bounce back from its lousy 2019. That means investors who buy now may enjoy substantial profits if stock prices recover.

Adding shares of any medical technology company to your portfolio is a risky move, but the rewards are often more impressive than those generated from investments in other industries.

If you are willing to take on the risk that Abiomed doesn’t recover from its troubled 2019, buying now is an excellent opportunity to acquire shares at a discounted price.

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.