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Bull of the Day: BioTelemetry (BEAT)

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BioTelemetry (BEAT - Free Report) is a $2.2 billion maker of cardiac monitoring devices and services that became a Zacks #1 Rank Strong Buy on November 1 after delivering an earnings report true to its name with a 65% positive surprise on the bottom line.
I chose BEAT as the Bull of the Day on Nov 15 when shares were trading below $62. Here's what I said then...
On October 30, BEAT reported third-quarter adjusted EPS of $0.53 vs. consensus estimates of $0.32 and sales of $100 million vs. the expectation of $98 million. 
The company also raised Q4 guidance and this inspired analysts to lift their estimates going forward, pushing BEAT shares into the top tier of the Zacks Rank. 
What Does BEAT Do?
BioTelemetry provides ambulatory outpatient management solutions for monitoring clinical information regarding an individual's health. It is focused on the diagnosis and monitoring of cardiac arrhythmias and other heart rhythm disorders using wireless and mobile technologies.
BEAT technology and systems, including mobile cardiac outpatient telemetry (MCOT), can give medical caregivers and patients remote information as well as historical data.
Estimates Jump for a Record Year
After BioTelemetry's Q3 report, investment bank analysts at Raymond James commented that "three straight quarters of accelerating organic revenue growth (+18% in 3Q) and 500bp of EBITDA margin expansion" made them "increasingly confident in management’s ability to execute."
Full-year 2018 revenue estimates have now climbed to $397 million, representing 38.4% growth. Next year's top line stands currently at $437 million, for 10% growth.
And on the profit line, 2018 EPS estimates were boosted 14% from $1.51 to $1.72, representing a 77% advance this year.
Next year's profit projections also rose to $1.72 which is flat year-over-year. But I suspect analysts are waiting until Q4 results before detailing their models.
(end of excerpt from my Nov 15 report)
Since then, full-year 2018 EPS estimates have climbed further to $1.81 and next year's look is now for $1.78.
Revenue projections have also moved up with this year's consensus now at $399 million and 2019 still pushing 10% growth at $439 million.
What else is new?
How about a price target bump from SunTrust analysts to $80 from $67. On Nov 29, the bank's med-tech team updated their long-run sales estimates for BioTelemetry citing 9.2% top-line growth over the period 2018-2021. Embedded in this view is the projection that mobile cardiac outpatient telemetry (MCOT) -- which is over 60% of sales -- grows at an estimated 9%, roughly in line with the market. BEAT has about 60% share of that market.
BEAT also has a growing Research segment that is able to use data from its devices and services. And its acquisition last year of the Switzerland-based LifeWatch expanded its reach in Europe.
And SunTrust believes that "BEAT’s very capable management team will articulate an interesting digital population health strategy sometime in 2019."
But there's an elephant in the room we haven't discussed yet. Here's what I wrote last month...  
Will Apple Leave Medical to BEAT?
BEAT shares took off this year after inking a deal with Apple (AAPL - Free Report) to conduct a joint Heart Study. The new Apple Watch Series 4, which received FDA clearance as a Class II device, has the potential to expand the cardiac monitoring market.
So while Apple may not be interested in BEAT technology, the brand and research pedigree has clearly benefited BEAT growth and interest. 
But this also raises concerns that a move by Apple into BEAT's territory could be fatal if the giant iPhone maker is pursuing "medical grade" applications for the Watch or some other device.
Right now, it appears that Apple is not treading on BEAT's turf. And optimism remains among analysts that the services growth trajectory of the big fruit will only continue to benefit the addressable market for the little heart-watcher.
(end of Nov 15 report excerpt)
Well on December 6 Apple made this announcement...
Starting today, the ECG app on Apple Watch Series 4 marks the first direct-to-consumer product that enables customers to take an electrocardiogram right from their wrist, capturing heart rhythm in a moment when they experience symptoms like a rapid or skipped heart beat and helping to provide critical data to physicians. The irregular rhythm notification feature on Apple Watch can now also occasionally check heart rhythms in the background and send a notification if an irregular heart rhythm that appears to be atrial fibrillation (AFib) is identified.
Did this news put a dent in BEAT shares? Not even a scratch for a stock that has weathered the Nov-Dec stock market heart-stopping chop better than most.
As I said last month, I would be a buyer of BEAT and its low-30s P/E multiple any time it dips into the $50s. That's still the drum I'm pounding.
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