Somanetics Corporation (SMTS): Shares beginning to break out of bullish 'flag' pattern

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.