The only real problem I had with Penumbra (PEN) when I last wrote about the stock
in June was the take-no-prisoners valuation. The company has continued
to post good growth since then, with quarterly revenue growth rates
around 25%, but expectations were so high already that the shares really
haven’t gone anywhere on a net basis (there was a steep decline into
the $130’s and a recovery to $180 along the way).
The
share still aren’t cheap, but management has at least outlined a
credible path to developing three markets worth roughly $1 billion a
piece, two of which don’t really have a lot of compelling competitive
offerings today. Premium small/mid-cap med-tech growth stories can trade
at 10x forward revenue (or higher), and Penumbra still has some upside
on that basis, but investors should at least be aware that any stumbles
relating to growth will likely be harshly punished.
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Penumbra Leveraging A Strong Portfolio Into Attractive Under-Penetrated Markets
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