Somanetics Corporation (NASDAQ: SMTS) is
engaged in the development, manufacture, and marketing of medical devices. Its primary offering is the INVOS System, a non-invasive monitoring device that provides continuous information about changes in blood oxygen saturation levels in patients at risk for restricted blood flow. The INVOS System has applications in cardiac and carotid artery surgery, pediatric and neonatal ICU, and diabetic patient surgeries. The firm also develops and markets the CorRestore patch, for use in cardiac repair and reconstruction. The company has operations in North America, Europe, Africa, the Middle East and Japan.
The firm pleased investors last week, when it reported Q4 EPS of 19 cents and revenues of $11.3 million. Analysts had been
looking for 17 cents and $10.9 million. Management also guided FY08 revenues to $50 million, versus the $49.39 million Street estimate. The stock popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, the price appears to be in the process of executing that breakout.
Brokers recommend the issue with one "strong buy", one "buy" and three "holds". Analysts see a 36% growth rate, through the next year. The stock's Price to Book ratio (3.04), Sales Growth rate (46.74%), EPS Growth rate (46.15%), Operating Margin (30.76%) and Net Profit Margin (24.83%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 56% of the outstanding shares. Over the past 52 weeks, SMTS has traded between $16.08 and $24.85. A stop-loss of $21.20 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.
Dr. Doom Nouriel Roubini believes the bubble is about to burst
Cramer on BloggingStocks: Investors are rethinking their snap judgments 
Lions Gate Entertainment: Still waiting for cash flow
