Charts Show Natus Medical (BABY) Stock Could Jump 20%
NEW YORK (TheStreet) -- Natus Medical BABY, a provider of newborn care and neurology healthcare products and services, is breaking out on the upside, and we want to join in.
In this first chart of BABY, above, we can see a sideways to higher trading range the past seven months. Prices gapped up last month and rallied to the top of the trading range. The On-Balance-Volume (OBV) line is super strong, and the Moving Average Convergence Divergence (MACD) oscillator is rising and above the zero line -- a bullish configuration.
This three-year weekly chart of BABY, above, shows everything in a bullish alignment: a rising 40-week moving average, a rising OBV line and a bullish MACD oscillator. The $50 to $55 area is our upside target. Traders should look to buy a dip towards $46, and then use a sell stop at $42.
TheStreet Ratings team rates NATUS MEDICAL INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
We rate NATUS MEDICAL INC (BABY) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 37.50% and other important driving factors, this stock has surged by 34.89% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- NATUS MEDICAL INC has improved earnings per share by 37.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NATUS MEDICAL INC increased its bottom line by earning $1.00 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($1.52 versus $1.00).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 39.8% when compared to the same quarter one year prior, rising from $7.82 million to $10.94 million.
- The revenue growth significantly trails the industry average of 37.7%. Since the same quarter one year prior, revenues slightly increased by 5.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- BABY has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, BABY has a quick ratio of 2.33, which demonstrates the ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: BABY
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.