With great multiples come great expectations, and
institutional growth investors can be merciless and indiscriminate in
selling out of high-multiple growth stocks that don’t quite live up to
expectations (or produce beat-and-raise quarters). This was one of my
biggest concerns with AxoGen (AXGN) when I wrote about the company earlier this year,
and the stock got hammered after what I believe was a quite modest
second quarter shortfall that didn’t seem to have much to do with
end-market demand.
To be sure, AxoGen is still in
many respects a “story stock”, and a story with above-average risk at
that. The addressable market opportunity is large and poorly-served
today, and AxoGen’s clinical results have been pretty impressive, but
driving adoption of new surgical procedures is not simple (or fast),
competition may yet become an issue, and expectations aren’t exactly
low. Still, when factoring in the incremental opportunities from future
applications like total joint replacement, this is looking more and more
like a risk worth taking.
Read more here:
Taking Another Look At AxoGen After A Nasty Post-Earnings Tumble
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