Between resurgent hospitalizations tied to the COVID-19 pandemic and higher costs/lower efficiency in the manufacturing and shipping operations, the last six months have been challenging for AngioDynamics (ANGO). This is reflected in the share price, which has declined about 16% since my last update, underperforming the S&P 500, but not doing all that badly compared to other smaller med-techs in similar markets (including names like Cardiovascular Systems (CSII), Inari (NARI), and Penumbra (PEN)).
At this point AngioDynamics remains a “show me story”; management has to show that it can generate meaningful revenue growth from its “Med Tech” portfolio, while also generating reasonable cash flows (or sale proceeds) from slow-growing legacy businesses making up about 75% of the revenue base.
The weaker near-term margin outlook doesn’t help, and AngioDynamics risks being stuck in an investor “no man’s land” between inadequate revenue growth to get the interest of “emerging/established growth” investors and inadequate margins for more value/FCF-oriented investors. That said, I do think the valuation is interesting for more risk-oriented investors.
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AngioDynamics - Progress Despite Margin And Pandemic Challenges
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