PEN Quick Quote PEN - Free Report
) is a $7 billion medical technology company specializing in minimally-invasive instruments for neurovascular and peripheral vascular diseases.
The company leverages its expertise in catheter-based technology to develop access devices for treating strokes, aneurysms, deep vein thrombosis, pulmonary embolism, and other patient events caused by blood clots.
I last wrote about Penumbra as the Bull of the Day in early April when shares were trading near $160. They since rallied to new all-time highs this week above $210, after a welcome breakout for bulls above $195.
One of the catalysts was from Citi analyst Joanne Wuensch who raised the firm's price target on Penumbra to $214 from $192 following the company's Q1 results on May 7.
But now I have to make PEN the Bear of the Day because EPS estimates have been slashed as hospitals are under new pressures from the COVID-19 pandemic and many surgical procedures are being delayed.
In the past 60 days, the full-year 2020 EPS consensus dropped from +20 cents to -9 cents, representing a 109% annual collapse. And next year's Zacks consensus was slashed 23% from $1.51 to $1.16.
Medical Instrument Innovators to the Rescue
Penumbra takes its name from the shadow-like effect in pathology and anatomy where the area surrounding an ischemic event such as thrombotic or embolic stroke can become dark. Immediately following the event, blood flow and therefore oxygen transport is reduced locally, leading to hypoxia of the cells near the location of the original insult.
Based in Alameda, CA, Penumbra sells its products to hospitals and clinics primarily through its direct sales organization in the United States, most of Europe, Canada and Australia, and through distributors in select international markets. Sales are expected to grow 16% this year to cross $635 million.
I have a special interest in medical technology stocks with innovative devices and instruments. In my Healthcare Innovators portfolio, we have owned another fascinating and successful company making use of catheter technologies to replace heart valves,
EW Quick Quote EW - Free Report
Buy PEN Under 10X Sales Every Time
I have actually written about Penumbra as the Bull of the Day several times since 2018, reminding investors that they could pay up to 10 times sales for this precision neuro-innovator as it should be on the shopping lists of
Johnson & Johnson
JNJ Quick Quote JNJ - Free Report
MDT Quick Quote MDT - Free Report
) , or
ABT Quick Quote ABT - Free Report
) at this valuation.
There have been several round trips between $130 and $180 to take advantage of. Even with another great quarterly report on Feb 25, the coronavirus crash took shares back down into my buy zone with a panic-driven spike through $125.
Now with shares coming off ATH above $210, investors should be taking profits and then be patient for a re-entry. This year's top line is expected to fall 2.36% to $535 million.
But analysts are keeping next year's revenue consensus just under $700 million, representing a 29% growth advance. That will make PEN a buy again soon, maybe at the $185-190 breakout level.
For now, keep your eye on those EPS estimates to see that they stop going down and stabilize. The Zacks Rank will let you know.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.