Cyberonics (NASDAQ: CYBX) designs and develops medical devices that provide vagus nerve stimulation (VNS) therapy for the treatment of epilepsy and other neurological disorders. The VNS therapy system features an implantable generator that delivers electrical signals to the brain to control seizures. It is the first medical device to be cleared by the U.S. FDA for treating epilepsy. It is also approved for use in Australia, Canada, and the European Union.

Cyberonics pleased investors last week, when it reported fiscal Q4 EPS of four cents and revenues of $33.9 million. Analysts had been looking for breakeven earnings and sales of $31.6 million. Management also guided FY09 revenues to $134-$138 million, versus Street consensus of $134.40 million. Canaccord Adams subsequently reiterated its "buy" rating on the shares and boosted its price target to $28.75.

The stock popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Altogether, brokers recommend the issue with two "strong buys" and five "holds". Analysts see a 130% growth rate, through the next year. The CYBX EPS Growth rate (-0.42 to 0.04 yr/yr) and gross margin (82.60%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 85% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $9.59 and $23.08. A stop-loss of $18.75 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.