Why the Sirtex Medical Limited share price just jumped 13% to a 52-week high

Following its latest earnings guidance released to the market this morning, the Sirtex Medical Limited (ASX: SRX) share price has risen 13% to $17.67. This is a new 52-week high, with shares up 13% over the past 12 months:

source: Google Finance

Sirtex management this morning stated that first half earnings before interest, tax, depreciation, amortisation (EBITDA) is expected to be around $34 million for the 6 months to 31 December 2017. However, full year EBITDA is expected to be around $75 million to $85 million, a strong improvement from underlying EBITDA of $61.5 million last year.

Higher earnings are due to lower costs, with Sirtex recently scrapping its research & development division to focus more directly on sales. Dose sales however were flat, and are expected to pick up somewhat in the second half. With no R&D expenditure, Sirtex faces a challenge in growing in the future, especially given the recent failure of several of its clinic trials.

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Motley Fool contributor Sean O'Neill owns shares of Sirtex Medical Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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