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How State Taxes Put a Bigger Pinch on the PoorNatus Medical (NASDAQ: BABY) makes
products for the detection, treatment, monitoring and tracking of common medical disorders in babies. Ailments addressed include hearing impairment, neurological dysfunction, epilepsy, sleep disorders, newborn jaundice and metabolic disorders. In addition, the company makes neonatal oxygen delivery hoods and heatshields. It also provides software that collects and reports newborn screening data to health labs and disease control centers.
The firm pleased investors earlier in the month, when it reported Q1 EPS of 11 cents and revenues of $36.9 million. Analysts had been looking for 10 cents and $35.5 million. The CEO particularly noted strong sales of the company's newborn hearing screening products. Management also guided Q2 EPS to 14-15 cents (14 cent consensus), Q2 revenues to $38-$39 million ($38.23M consensus), FY08 EPS to 70-72 cents (67 cent consensus) and FY08 revenues to $161-$162 million ($159.58M consensus).
The news
popped the stock out of a late April "cup" into the early May "handle" of a Cup & Handle formation. The price is now showing signs of completing the pattern with a bullish rise from the right-hand side of the "handle".
Brokers recommend BABY with two "strong buys", four "buys", one "hold" and one "underperform". Analysts see a 27% average annual growth rate, through the next five years. The stock's Price to Book ratio (3.96), Sales Growth rate (36.23%) and EPS Growth rate (57.14%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 74% of the outstanding shares. Over the past 52 weeks, BABY has traded between $13.87 and $21.80. A stop-loss of $18.50 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.
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