Shares of Natus Medical Inc. BABY rallied to a 52-week high of $49.72 on Nov 27, and closed a tad bit lower at $49.22. This represents a strong one-year return of approximately 36.6%, much better than the S&P 500’s return of 1.5% over the same period.
We note that earnings of this Zacks Rank #1 (Strong Buy) stock have outperformed the Zacks Consensus Estimate by an average of almost 5.3% in the last four quarters. Natus Medical has a market cap of $1.60 billion and expected EPS growth of 18.5%.
Growth Catalysts
Investors seem to be encouraged by Natus Medical’s impressive third-quarter results, wherein the top and the bottom line managed to beat expectations. Adjusted earnings improved 18.2% on a year-over-year basis and also surpassed the Zacks Consensus Estimate by a penny. Revenues increased 5.2% year over year to $94.6 million and steered past the Zacks Consensus Estimate of $93 million.
Moreover, Natus Medical raised its full-year 2015 revenue and adjusted earnings guidance. Adjusted earnings are now expected in the band of $1.51–$1.53, compared to the previous range of $1.50–$1.52.
We are also positive on Natus Medical’s product launches and pipeline strength. The Vista EMG Ultrasound, Hearing Screening Service business (Peloton), Global Neuro-Diagnostics (GND) and NicView products are expected to continue to drive revenues in the near term. Moreover, the company is likely to introduce innovative products over the next 18 months in both the newborn care and neurology platforms.
Estimate Revisions
The Zacks Consensus Estimate for 2015 and 2016 has remained steady at $1.52 and $1.87, respectively, over the last 30 days.
Other Stocks to Consider
Other well-placed stocks in the medical sector are Masimo MASI, Fluidigm Corp FLDM and Olympus Corp OCPNY. All the three stocks sport a Zacks Rank #1.
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