Saturday, August 5, 2017

"On Target" Good Enough For Wright Medical Today

Buyout speculation can do good things for a stock's price in the short term, but investors can be fickle with that sort of speculation. Between off-and-on optimism regarding a buyout and a disappointing first quarter, Wright Medical (WMGI) hadn't had the easiest run since my last update. Today the shares are up nicely in the wake of second quarter earnings, though, as investors are apparently a little more comfortable that their worst-case scenarios for the year are less likely to materialize.

The upper $20's to low $30's have long been a tricky place for me with respect to Wright Medical shares. I have no disagreement that these shares could easily fetch more in a buyout, nor that the market will sometimes pay rich multiples for fast-growing med-tech stocks, but core fundamentals-driven valuation seems more comfortably in the high $20's. The second half of this year should see accelerated revenue growth and improving margins, though, so I wouldn't ignore the possibility that earnings momentum draws more positive attention to the shares.

Read the full article here:
"On Target" Good Enough For Wright Medical Today

No comments: