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Abiomed (NASDAQ:ABMD ) is a high-growth medical device company with strong fundamentals and compelling growth opportunities. In the last five years, the company's revenue has grown at a CAGR of 16%, and I expect revenue will continue to grow at such a rate in the long term (next five years). The company's future revenue growth will be primarily driven by its Impella range of micro heart pumps. Long-term investors can buy the company's shares around the current price.

Abiomed is a medical technology company which develops medical devices for patients with heart disease to provide them circulatory support and oxygenation. The company's products enable the heart to rest by increasing blood flow to the coronary arteries and end-organs. The products also help patients with respiratory failure in providing sufficient oxygenation. The company's Impella heart pumps are capable of assisting the heart in its pumping function.

Abiomed's Impella range of percutaneous micro heart pumps (Impella 2.5, Impella CP, Impella 5.0/5.5) will drive the company's revenue growth in the next five years. Impella is primarily used by interventional cardiologists to support patients with coronary heart disease (CHD), and patients with high-risk PCI (percutaneous coronary intervention). The pumps help these patients in maintaining their proper blood circulation. The pumps have integrated motors with sensors which can pump up to 2.5 to 6 liters of blood per minute. Physicians can quickly insert an Impella heart pump to the left ventricle of the heart via the femoral or axillary arteries. The device then draws blood from the ventricle and delivers the blood to the circulatory system. Impella heart pumps perform well in the competitive environment since it has the potential to increase cardiac output. The pumps offer continued function irrespective of timing or trigger, and provides stability to patients despite the presence of cardiac conditions like arrhythmias. These are the reasons why these devices are increasingly being used in treating heart failure compared to competitor devices, such as intra aortic balloon pumps (IABPs) and the TandemHeart device. Impella will continue to boost Abiomed's revenue growth in the long term.

Abiomed's OXY-1 System is the company's another growth driver. The device, which is a compact cardiopulmonary support system, acts as a respiratory assistance device for patients suffering from cardiogenic shock and respiratory failure. It is a portable external device with an integrated oxygen concentrator and pump which is used for patients whose lungs don't provide sufficient oxygenation. The device works by taking a patient's venous blood, then oxygenating the blood after removing carbon dioxide from it, and finally returning it to the patient. The device performs well compared to competitor products, such as traditional ECMO (extracorporeal membrane oxygenation) machines, since it ensures that patients have uniform blood flow for minimizing the chance of developing thrombosis. In addition, setting up and managing the device is simple, which leads to increasing adoption of the device. OXY-1 System will drive Abiomed's long-term revenue growth.

Treatments for heart failure are provided by several medical technology companies, and they compete intensely with each other. Abiomed is such a company which competes on the basis of innovation, product quality and performance, and product ease of use. Abiomed's competitors include Abbott Laboratories (ABT), Medtronic (MDT), Edwards Lifesciences (EW), Boston Scientific (BSX), LivaNova (LIVN), and Terumo Corporation (OTCPK:TRUMF).

Abiomed's primary competitive advantage is that it has gained substantial expertise in developing circulatory support devices over the past many years. The company uses this expertise to develop new circulatory support devices, and to make enhancements to its existing devices (the company has a strong product pipeline; more about this later). This strategy helps the company grow its revenue on a sustainable basis. The company's another competitive advantage is that its Impella platform provides patients coronary perfusion and end-organ perfusion via offering them technologically advanced heart support mechanism compared to competitor products. The Impella platform will continue to boost Abiomed's revenue growth driven by significant product differentiation.

Abiomed's fiscal Q1 2022 total revenue came in at $252.6 million, an increase of 53% compared to $164.9 million in the year-ago period. The company's Impella product revenue came in at $241.5 million, which increased 55% year-over-year from $155.4 million in the year-ago period. Non-GAAP net income came in at $51.1 million (which resulted in an EPS of $1.10), an increase of 95% compared to $26.1 million (which resulted in an EPS of $0.58) in the year-ago period.

Abiomed delivered outstanding year-over-year results for the first quarter of fiscal year 2022 driven by record global revenue and patient utilization in the US, Europe and Japan. The company's Impella CP, Impella 5.5 and Impella RP pumps can now utilize the company's SmartAssist software, which has been enhanced with the company's Impella Connect software for online monitoring of patients. This development has created the scope of significant revenue expansion for the company.

Abiomed has a strong product pipeline consisting of Impella ECP, Impella BTR, and Impella XR Sheath. The company's Impella ECP micro heart pump, which is the world's smallest heart pump, has received breakthrough device designation from FDA. This will prioritize the device's regulatory review processes. The device is compatible with small bore access and closure techniques, which I believe will result in increasing adoption for the device. The company's Impella BTR device is another micro heart pump currently under development, which is smaller compared to other Impella pumps. The device will be created based on advanced technology with the potential of providing up to one year of hemodynamic support (which implies it will be able to outcompete competitor products since providing one year of hemodynamic support is significant). The company's Impella XR Sheath simplifies access for complex interventions with small bore access and closure, and creates less trauma compared to large bore sheaths. An Impella XR Sheath for the Impella 2.5 device has already received FDA 510(k) clearance, and another Impella XR Sheath for the Impella CP device is currently under development. The sheath products will drive demand for the Impella products. Eventually, all these products will drive the company's overall revenue growth.

Abiomed's most relevant competitors are Abbott Laboratories, Medtronic, Edwards Lifesciences, Boston Scientific, and LivaNova. Abiomed's non-GAAP forward (FY3) P/E multiple is 56.04x, compared to Abbott's 24.55x, Medtronic's 19.73x, Edwards Lifesciences' 41.62x, Boston Scientific's 21.13x, and LivaNova's 27.49x. Abiomed's trailing 12-month price to sales multiple is 18.02x, compared to Abbott's 5.69x, Medtronic's 5.73x, Edwards Lifesciences' 15.31x, Boston Scientific's 5.72x, and LivaNova's 4.05x. Abiomed's trailing 12-month price to cash flow multiple is 56.72x, compared to Abbott's 21.51x, Medtronic's 24.98x, Edwards Lifesciences' 52.32x, Boston Scientific's 28.52x, and LivaNova's 49.77x. (Data Source: Seeking Alpha).

Abiomed is richly valued compared to its competitors. The company has a cash-rich balance sheet consisting of $523.03 million of cash and $5.66 million of debt. The company's valuation is expensive due to its revenue growth opportunities driven by current growth drivers, and strong product pipeline. Since CHD is the leading cause of death in the world, Abiomed's devices will continue to see strong demand and adoption globally, which will drive the company's long-term revenue growth. In the last five years, Abiomed's revenue has grown at a CAGR of 16%, and I expect revenue will continue to grow at such a rate in the next five years. I believe the company's current share price reflects a significant part of this growth opportunity. However, the entire growth opportunity is not priced in. That's why the share price has meaningful long-term upside despite its rich valuation.

Assuming that Abiomed's revenue will grow at a CAGR of 16% in the next five years, I will find out the company's long-term (five years) share price. The company's trailing 12-month revenue is $935.3 million, and at a CAGR of 16%, its end-2026 revenue will be $1,964.50 million, or $43.29 per share. In the last five years, Abiomed's shares have traded between the price to sales multiples of 8x and 35x. However, since I believe a significant part of the company's growth opportunity is built into its current share price, I am comfortable to assign a price to sales multiple of 15x on the company's end-2026 revenue per share for discovering the company's long-term share price (I expect the company will continue to have meaningful growth opportunities beyond five years, which justifies a 15x price to sales multiple). Assigning a price to sales multiple of 15x on Abiomed's end-2026 revenue per share, I get $649.35 as the company's end-2026 share price. I am bullish on the company around the current share price.

For the company to be successful, its Impella range of micro heart pumps should be accepted by leading cardiac surgeons and interventional cardiologists who are influential in medical device purchasing decisions of hospitals. In order to grow its revenue sustainably, the company should be consistent in maintaining its existing relationships and developing new relationships with such surgeons and cardiologists. If the company fails to achieve this, its revenue growth and operating results could be negatively impacted.

The company's future revenue growth and profitability depend on its ability to manage its long-term revenue growth initiative properly. The initiative involves selling its medical device products, particularly its Impella devices, to hospitals which have administrative requirements to introduce new technologies. However, this is difficult to achieve on a continuous basis, and if the company fails to do this consistently, its future growth could be adversely affected.

Abiomed has strengthened its product portfolio by acquiring preCARDIA, a heart failure company. Abiomed acquired preCARDIA because the company develops solutions for patients with acute decompensated heart failure (ADHF), and these solutions will complement Abiomed's heart device product portfolio. The acquisition will boost Abiomed's long-term revenue growth because annually more than one million patients become victim of ADHF in the US. Investors with a long-term time horizon can buy Abiomed's shares around the current price to maximize their profit.

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.