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Analyst Blog

On Jan 31, Zacks Investment Research upgraded Natus Medical Inc. (BABY - Snapshot Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Natus Medical has been witnessing rising earnings estimates owing to impressive fourth-quarter 2013 results and an increased guidance for 2014. Moreover, this medical devices maker also delivered positive earnings surprises in all of the last 4 quarters.

On Jan 29, Natus Medical reported fourth-quarter 2013 adjusted earnings per share of 37 cents, surpassing the Zacks Consensus Estimate of 32 cents by 15.6%. The fourth-quarter earnings also steered ahead of the prior-year quarter figure of 29 cents by 27.6%.

BABY registered impressive growth on the back of improved revenues from the European as well as the international market.

Based on its progress, the company raised its earnings per share projection for full-year 2014 to $1.14 -$1.18 from the previous guidance of $1.12 -$1.16. On the other hand, revenues are expected to be in the range of $345 million to $350 million for the full year.

The Zacks Consensus Estimate for 2014 increased 1.8% to $1.16 per share as all estimates were revised higher over the last 30 days. The current Zacks Consensus Estimate falls within the guidance range provided by Natus Medical.

The company’s prime focus is to expand through organic growth. BABY also seeks to achieve its operating objectives through increased focus on earnings and healthy cash generation. We believe that the consistent focus of management to eventually occupy a leading position in both the Newborn Care and Neurology products market reinforces investors’ confidence in the growth potential of Natus Medical.

Other stocks to Consider

Investors interested in the medical instruments industry can look at better-ranked stocks like Cyberonics Inc. (CYBX - Analyst Report) DexCom, Inc. (DXCM - Analyst Report) and Echo Therapeutics, Inc. (ECTE - Snapshot Report). While DexCom and Echo Therapeutics carry a Zacks Rank #2 (Buy), Cyberonics has the same Zacks Rank as BABY.
 

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