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Here's How Shockwave Medical Tuned Up A Six-Quarter, Triple-Digit Sales Growth Spree

The first quarter of 2021 was a turning point for Shockwave Medical (SWAV), says Chief Executive Doug Godshall, a moment when SWAV stock started to soar.

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That's when the Food and Drug Administration approved Shockwave's intravascular lithotripsy device for patients with calcified coronary artery disease. The device, called C2, uses the same technology that breaks up kidney stones to "crack" calcifications in arteries, allowing blood flow to normalize.

Shockwave's growth since then has been astronomical. The company is sitting on six straight quarters of triple-digit sales growth. Seven analysts who follow SWAV stock for FactSet have an overweight rating on it. They predict 90% sales growth in the third quarter.

"We had very high expectations and we were nowhere close to high enough expectations given how well it has done," Godshall told Investor's Business Daily. "I never expected to be this lucky to be associated with a product that fundamentally changes the standard of care so rapidly as our C2 device did."

SWAV Stock: Calcium Buildup Heightens Risk

Shockwave's bread-and-butter business is in calcium. Calcium can build up in the arteries, putting people at risk of stroke, heart attack or other cardiovascular problems.

Traditionally, patients have had to undergo a procedure called atherectomy to remove the calcium. This process involves a small drill to remove the soft, built-up plaque. But when the plaque escapes, it can lead to problems downstream in the body.

Shockwave RevenueFurther, women present symptoms of calcium buildup later in life. Therefore, they are more frail as older patients and tend to have worse outcomes.

Enter Shockwave. Shockwave sells four catheters of varying sizes and lengths. The physician then threads the catheter into a patient's artery. There, the device uses sound waves to break up calcium inside the arterial walls. This prevents debris from traveling through the vessel and, ultimately, causing more problems, Godshall said.

An atherectomy procedure "is a little bit scary for a lot of doctors," he said. "So, they were thrilled to find something as simple to use and as safe and predictable as our tools are."

SWAV stock investors are also thrilled. Since gaining its first approval for the coronary device, C2, in early 2021, shares have more than doubled. Shockwave also sells three catheters for peripheral arteries outside the heart.

Competition Is Coming, But Will It Be Late?

It's true that Shockwave won't be alone in its segment forever. Other companies are eyeing the space.

Shockwave Patients"Certainly, there are a lot of folks who underappreciated how significant the opportunity was to give cardiologists and vascular surgeons a safer and more reliable treatment option for calcified patients," Godshall said. "It wouldn't surprise me if other people were working on it."

Shockwave now expects competition to begin cropping up in 2025. Cardiovascular Systems (CSII) is working on a system for calcified coronary and peripheral arteries. By then, Shockwave hopes to have launched at least six new catheters. Some of those will replace older catheters and some will target entirely new arteries, he said.

Recently, Shockwave announced its plan to examine its coronary device in an all-female study. The company plans to enroll up to 400 women with calcified coronary arteries in the U.S. and Europe. It will also follow their outcomes for three years.

The study aims to confirm a trend cardiologists discovered in Shockwave's pivotal study. Women tend to experience symptoms later in life and are, therefore, frailer when they undergo treatment. Still, evidence suggests they could have better outcomes with intravascular lithotripsy than traditional atherectomy.

Godshall also noted Shockwave is also running two studies of catheters above the knee and below the knee. Those studies could have a chance to stoke SWAV stock into an even steeper climb.

Tech Leader With Strong Ratings

This year, alone, Shockwave shares have surged 50%. The stock is easily outperforming its industry group of peers. The medical-systems/equipment industry group has fallen more than 37% over the same time period. It's ranked No. 31 out of 197 groups IBD tracks.

SWAV stock has a nearly perfect Relative Strength Rating of 97, according to IBD Digital. This means shares rank among the top 3% of all stocks — regardless of industry group — in terms of performance over the past 12 months.

Shares also have a strong Composite Rating of 95, putting SWAV stock in the leading 5% of all stocks for fundamental and technical measures. Further, Shockwave is on the IBD Tech Leaders list.

The surge for SWAV stock comes amid a greater understanding of the opportunity for new interventions in coronary and peripheral artery disease. Risk factors include age, diabetes and high cholesterol. With an aging population, these conditions are also growing in prevalence.

Physicians "are treating a much higher percentage of patients with calcifications compared to 10 years ago," Godshall said. "It's a growth disease because of the underlying demographics."

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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