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Do Abiomed’s Valuations Look Attractive?

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Abiomed’s valuation

Abiomed (ABMD) is a leading medical devices company. Its revenues rose 36% YoY to ~$180 million in fiscal Q1 2019 compared to $133 million in Q1 2018. The chart below compares revenues and EPS for Abiomed since the first quarter of 2018.

Forward PE

On September 5, the company was trading at a forward PE multiple of ~85.5x as compared to the industry average of ~20.5x. Medtronic (MDT), Abbott Laboratories (ABT), and Boston Scientific (BSX) are trading at lower forward PE multiples of 18.2x, 21.2x, and 23.1x, respectively, as compared to Abiomed.

Forward EV-to-EBITDA multiple

On a capital structure neutral and excess cash-adjusted basis, Abiomed currently trades at a forward EV-to-EBITDA multiple of ~64.9x, which is higher than the industry’s average of ~16.4x as of September 5. Medtronic (MDT), Abbott Laboratories (ABT), and Boston Scientific (BSX) are trading at a forward EV-to-EBITDA multiple of 14.4x, 16.3x, and 18.2x, respectively.

Forward EV-to-revenues multiple

Abiomed currently trades at a forward EV-to-revenues multiple of ~20.6x, which is higher than the industry’s average of ~4.7x as of September 5. Medtronic (MDT), Abbott Laboratories (ABT), and Boston Scientific (BSX) are trading at a forward EV-to-revenues multiple of 4.7x, 4.2x, and 5.3x, respectively.

The Health Care Select Sector SPDR ETF (XLV) holds 0.5% of its total investment in Abiomed (ABMD), 3.6% in Medtronic (MDT), 1.4% in Boston Scientific (BSX), and 3.3% in Abbott Laboratories (ABT).

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