Medical device stocks tend to outperform in the long term but are considered to be boring. In certain market conditions, this is a blessing as they tend to have stable revenues and pay above-average dividends.However, even within this group, we can find stocks that are at the beginning of their growth journeys whose stocks can outperform. One area of healthcare that is seeing innovation and also patients are willing to spend massive sums is on the health and wellbeing of newborns.
Below, we highlight one of the most intriguing under-the-radar medical device stocks in this space. That stock is Natus Medical (NTUS).
NTUS Background
NTUS has been in business since the late 80s. The company went public in 2001. However, NTUS remained a small-cap stock for decades. Part of what has held the company back is its lack of significant revenue growth in recent years.
NTS is a top provider of healthcare products for monitoring, screening, treating, detecting, and tracking a wide range of common medical ailments. Those suffering from epilepsy, neurological problems, hearing impairment, and sleep disorders benefit from NTUS’s medical devices. The company’s hearing and balance products account for about 15% of aggregate revenue.
The company also has a neonatology product line for newborn care. About 25% of NTUS’s aggregate revenue stems from its infant care segment. Examples of the company’s newborn care products include phototherapy devices for newborn jaundice, hearing screening systems for newborns, and infant head-cooling products to treat brain injuries.
NTUS POWR Rating
NTUS has an A POWR Rating grade. The stock has As in the Value and Growth components of the POWR Ratings. NTUS has a B Quality component grade. Investors searching for more information about NTUS are encouraged to click here to find out how the stock performs in the Momentum, Sentiment, and Stability components of the POWR Ratings.
Out of the 185 stocks in the Medical - Devices & Equipment space, it is ranked in the top 10. NTUS ranks seventh overall in its segment. Click here to find out more about the stocks in this category.
NTUS Notes of Interest
NTUS is currently trading about $3 away from its 52-week high of $29.70. The stock's 52-week low is $16.38.
NTUS has a forward P/E ratio of 22.29. This is somewhat of an elevated ratio yet it shouldn't preclude establishing a position as the figure is not egregiously high. Furthermore, NTUS is also attractive as it has a low beta of 0.52. A beta this low is a sign the stock will hold its value if the market falls off a cliff.
Take a close look at NTUS's most recent quarterly earnings and you will find the company raked in 29 cents per share. The fact that the company was in the black in the quarter is certainly a good sign. Compare these quarterly earnings to the same quarter one year ago when the company lost 13 cents per share and it is easy to see why investors are becoming that much more bullish on the stock.
All in all, NTUS's aggregate revenue for the second quarter was $115.98 million. This figure exceeded the consensus estimate by nearly 1%. In the prior four financial quarters, NTUS surpassed consensus earnings per share estimates two times.
NTUS According to the Analysts
NTUS appears to have a bright future based on analyst price targets for the stock. NTUS is currently priced at $25.91. The average analyst price target for NTUS is $36. If the stock hits this target, it will have popped by nearly 35%. Add this medical device stock to your portfolio while it is affordably priced and you will likely be pleased with its performance.
NTUS shares were trading at $25.92 per share on Wednesday afternoon, down $0.60 (-2.26%). Year-to-date, NTUS has gained 29.34%, versus a 21.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.
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