Shares of Nxstage Medical, Inc. NXTM rallied to a new 52-week high of $22.60 on Dec 30 and closed a tad lower at $22.37. This represents a strong year-to-date return of approximately 24.8%, far exceeding the S&P 500’s return of 0.2% over the same period.
Currently, Nxstage Medical has a Zacks Rank #1 (Strong Buy). The stock has an impressive market cap of $1.43 billion and a long-term expected earnings growth rate of approximately 18.3%.
Growth Catalysts
We believe that solid third-quarter 2015 results, an optimistic outlook, and a healthy product pipeline are the key reasons behind the recent jump in price.
Nxstage Medical reported better-than-expected results in the third quarter of 2015, on the back of a stellar performance by the company’s System One segment. Total revenues of $86.5 million jumped 14.9% on a year-over-year basis and also managed to outpace the Zacks Consensus Estimate. Loss per share in the third quarter narrowed down approximately 72.7% from the year-ago quarter and beat the Zacks Consensus Estimate.
Buoyed by strong third-quarter results, management raised its 2015 top- and bottom-line expectations. Revenues are now expected within the range of $332 million to $333 million, as compared to the previous range of $324 million to $328 million. Moreover, net loss is projected in the band of $15 million to $16 million, as compared to the previous range of $18 million to $20 million.
Moreover, the company has a strong product pipeline which, according to us, is a major positive. NxStage Medical is expected to roll out a next generation hemodialysis system toward the end of 2016. Further, the company plans to launch a next generation fluid system in order to gain better market traction.
Estimate Revisions
Over the last 60 days, the Zacks Consensus Estimate for Nxstage Medical narrowed down 22.6% to a loss of 24 cents per share for 2015; while the same narrowed down 30.4% to a loss of 16 cents for 2016. These estimates represent year-over-year improvement of 37.6% for 2015 and 34.9% for 2016.
Key Picks
Some of the other well-placed stocks in the same space include INSYS Therapeutics INSY, ICU Medical ICUI and LeMaitre Vascular LMAT, all of which sport a Zacks Rank #1 (Strong Buy).
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