This chart of NXTM, above, shows a very strong rally in early November -- with NXTM climbing to $21 from $17, before correcting. The correction could be over soon, and further strength is expected in the weeks and months ahead.
It has been a while since I have seen a saucer bottom, as in the chart above, but this one on NXTM is a welcome sight. This pattern gives us upside price targets in the mid $20s. A sell-stop below $19 should be appropriate.
TheStreet Ratings team rates NXSTAGE MEDICAL INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate NXSTAGE MEDICAL INC (NXTM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the company's return on equity has been disappointing.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 74.8% when compared to the same quarter one year prior, rising from -$6.71 million to -$1.69 million.
- NXTM's revenue growth trails the industry average of 37.8%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- 49.10% is the gross profit margin for NXSTAGE MEDICAL INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -1.94% is in-line with the industry average.
- NXSTAGE MEDICAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, NXSTAGE MEDICAL INC reported poor results of -$0.40 versus -$0.30 in the prior year. This year, the market expects an improvement in earnings (-$0.25 versus -$0.40).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, NXSTAGE MEDICAL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: NXTM
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.