Company Description

Cyberonics Inc. develops and markets medical devices specifically focused on neurological disorders, including epilepsy, one of the most common neurological disorders. The company uses vagus nerve stimulation through its Cyberonics NCP System to reduce the severity and frequency of seizures.

Cyberonics distributes its products in North and South America, Asia, and Europe. The Houston-based medical products company has approximately 440 employees and a market cap. of $443 million.

A Strong Second Quarter

On Nov 19 Cyberonics released its second-quarter results which included a 24% increase in net sales. Sales where $36.0 million, up from $28.9 million. U.S. sales drove the higher numbers,

Given the excellent quarter, Cyberonics raised its sales guidance for fiscal 2009 to between $136 million and $140 million, up $2 million on the high and low end.

Net income was $8.3 million, turning the corner from its loss of $4.1 million one year ago. The net income figure equates to 14 cent per share, well above the 6 cents forecast by Wall Street.

Consistantly Surprising

The 133% second-quarter surprise was the fourth surprise this year, each averaging 164%.

Analysts continue to raise estimates after estimates for 2010 initial slid a few months ago. The current consensus for fiscal 2009 is 41 cents per share, up from 32 cents one month ago. Next years estimates are up to 59 cents from 54 cents over the same period of time.

The current consensus estimates are projecting year-over-year growth of 190% for fiscal 2009 and 45% for 2010. These rates are fairly priced with a PEG ratio of 1.1, right in line with the industry average.

The Chart

Shares of CYBX have successfully tested the 52-week low, forming a double bottom this fall. Since then, shares convincingly broke through resistance near $14. Take a look at the chart below.