Natus Medical (BABY) Stock Drops on Downbeat Q3 Forecast - TheStreet

NEW YORK (TheStreet) -- Shares of Natus Medical (BABY)  were dropping 9% to $40.03 on heavy trading volume late-afternoon Monday as the newborn care and neurology healthcare products company reduced its fiscal 2016 third-quarter revenue guidance.

Natus Medical now expects revenue to be in the range of $89 million to $91 million, down from its prior forecast of $97 million to $98 million in revenue. 

Wall Street is looking for the Pleasanton, CA-based company to report $97.77 million in revenue for the quarter. 

The shortfall is primarily due to a shipment hold that was voluntarily initiated at its Seattle facility. The hold is in place while the company fixes deficiencies in its engineering and manufacturing quality processes, Natus Medical said in a statement. 

Natus Medical said it expects production to resume in the 2016 fourth quarter and the first quarter of 2017. 

Additionally, the company announced today that it agreed to purchase GN Otometrics for $145 million in cash. GN Otometrics is a Danish manufacturer of hearing instruments. 

Roth Capital said it was disappointed about the shortfall, but added that Natus Medical's acquisition of GN Otometrics is "a meaningful positive" for the company, according to TheFly.

The firm has a "buy" rating and $47 price target on the stock.

About 1.5 million of the company's shares have changed hands so far today vs. its average volume of 253,084 shares per day.

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

TheStreet Ratings team rates Natus Medical as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that it rates. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, growth in earnings per share and good cash flow from operations. The team feels its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

You can view the full analysis from the report here: BABY

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