Investing.com -- Shares of Penumbra, Inc. (NYSE: NYSE:PEN) climbed 8.3% after the announcement that Stryker (NYSE: NYSE:SYK), a prominent player in the medical technology sector,...
Investing.com -- Shares of Penumbra, Inc. (NYSE: NYSE:PEN) climbed 8.3% after the announcement that Stryker (NYSE: NYSE:SYK), a prominent player in the medical technology sector, has entered a definitive agreement to purchase all outstanding shares of Inari Medical (TASE:PMCN), Inc. (NASDAQ: NARI) for $80 per share in cash.
The movement in Penumbra's stock appears to be driven by market perception that Stryker's acquisition could benefit the entire mechanical thrombectomy (MT) market, including Penumbra. Analysts believe that Stryker's entry as a significant and well-funded competitor could create a "rising tide that lifts all boats," suggesting that increased attention and investment in the MT space could lead to broader growth and validation for companies like Penumbra.
Stifel analyst Matthew Blackman provided insight into the market dynamics, stating, "we would view a takeover by SYK as a long-term positive for PEN and the MT market as a whole." This comment reflects a sentiment that the acquisition could lead to greater market penetration and support Penumbra's valuation.
The positive reaction in Penumbra's stock indicates investor confidence in the company's position within the market, despite the potential competition from a larger entity like Stryker. The acquisition news has been interpreted as a validation of the MT market's potential and Penumbra's premium multiple, which aligns with the valuation implied by Stryker's bid for Inari Medical.
As the market continues to digest the implications of this acquisition, Penumbra's stock movement serves as a barometer for investor expectations regarding the future of the MT market. With Stryker's entry, there is an anticipation of increased market activity and growth opportunities for established players like Penumbra.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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Sector Update: Health Care Stocks Rise in Afternoon Trading
Health care stocks rose Tuesday afternoon with the NYSE Health Care Index and the Health Care Select Sector SPDR Fund (XLV) both up 0.7%.
The iShares Biotechnology ETF (IBB) climbed 1.2%.
In corporate news, Stryker agreed to buy medical technology maker Inari Medical for $4.9 billion in cash. Stryker shares fell 1.2%, and Inari jumped 22%.
Hoth Therapeutics shares more than tripled after interim results from a phase 2a trial of HT-001 showed that all patients met the primary efficacy endpoint.
Immuneering shares rose 5.1% after new data from a phase 2a trial of the company's lead candidate IMM-1-104 in pancreatic cancer showed better overall response and disease control rates.
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Health care stocks rose Tuesday afternoon with the NYSE Health Care Index and the Health Care Select Sector SPDR Fund (XLV) both climbing 0.7%.
The iShares Biotechnology ETF (IBB) climbed 1.3%.
In corporate news, Stryker agreed to buy medical technology maker Inari Medical for $4.9 billion in cash. Stryker shares fell 1.3%, and Inari jumped 22%.
Risk Warnings and Disclaimers
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Stocks Turn Lower as Bond Yields Rise on Strong US Economic Reports
The S&P 500 Index today is down -0.32%, the Dow Jones Industrials Index is up +0.11%, and the Nasdaq 100 Index is down -0.93%. March E-mini S&P futures (ESH25) are down -0.32%, and March E-mini Nasdaq futures (NQH25) are down -0.92%.
Stocks today gave up early gains and are trading mostly lower. Stocks retreated as the 10-year T-note yield climbed to an 8-month high. Bond yields spiked higher after the latest US JOLTS job openings and the ISM services index reports were better than expected and bolstered speculation the Fed will refrain from cutting interest rates this month.
Stocks today initially moved higher on strength in chip makers as Micron Technology rose more than +3% after Nvidia said the company is providing it with memory chips for its new GPUs. Stocks also have carryover support from Monday when the Washington Post reported that President-elect Trump’s aides are weighing universal tariff plans covering only critical imports. If implemented, such a plan would disrupt global trade less than expected and reduce the inflationary impact of the tariffs.
The US Nov trade deficit widened to -$78.2 billion from -$73.6 billion in Oct, a negative factor for Q4 GDP, but a smaller deficit than expectations of -$78.3 billion.
US Nov JOLTS job openings unexpectedly rose +259,000 to a 6-month high of 8.098 million, stronger than expectations of a decline to 7.740 million.
The US Dec ISM services index rose +2.0 to 54.1, stronger than expectations of 53.5.
Richmond Fed President Barkin said the Fed remains “highly committed” to a 2% inflation target, and if price pressures persist, the Fed will have to be tougher with interest rates.
The markets are awaiting this week’s economic reports to gauge the strength of the US economy. On Wednesday, the December 17-18 FOMC meeting minutes will be scrutinized to see if the Fed will continue to cut interest rates. Finally, Friday’s monthly US payroll report will assess the strength of the US labor market (Dec nonfarm payrolls expected +160,000 and the Dec unemployment rate expected to remain steady at 4.2%).
The markets are discounting the chances at 7% for a -25 bp rate cut at the January 28-29 FOMC meeting.
Overseas stock markets today are higher. The Euro Stoxx 50 climbed to a 2-1/2 month high and is up +0.37%. China’s Shanghai Composite Index closed up +0.71%. Japan’s Nikkei Stock 225 closed up +1.97%.
Interest Rates
March 10-year T-notes (ZNH25) today are down -13 ticks. The 10-year T-note yield is up +6.1 bp to 4.691%. Mar 10-year T-note futures today tumbled to a 7-1/4 month low, and the 10-year T-note yield jumped to a new 8-month high of 4.693%. T-notes are weighed down today by carryover pressure from a slide in 10-year UK gilt prices to a 14-1/2 month low. Losses in T-notes accelerated today on the stronger-than-expected US JOLTS and ISM services reports, hawkish factors for Fed policy. Also, rising inflation expectations are bearish for T-notes as today’s 10-year breakeven inflation rate rose to a 1-3/4 month high of 2.391%. In addition, supply pressures are undercutting T-notes as the Treasury will auction $39 billion of 10-year T-notes today as part of this week’s $119 billion T-notes and T-bonds auction package.
European government bond yields today are moving higher. The 10-year German bund yield rose to a 2-month high of 2.484% and is up +2.8 bp to 2.474%. The 10-year UK gilt yield climbed to a 14-1/2 month high of 4.682% and is up +6.4 bp to 4.674%.
Eurozone Dec CPI rose +2.4% y/y, up from +2.2% y/y in Nov and right on expectations. Also, Dec core CPI rose +2,7% y/y, unchanged from Nov and right on expectations.
The ECB’s Nov 1-year inflation expectations rate rose to 2.6% from 2.5% in Oct. The ECB’s Nov 3-year inflation expectations rate rose to 2.4% from 2.1% in Oct.
Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at its January 30 policy meeting.
US Stock Movers
Palantir Technologies is down more than -5% to lead losers in the S&P 500 on signs of insider selling after an SEC filing showed director Moore sold $1.49 million shares last Thursday.
Nvidia is down more than -5% to lead losers in the Dow Jones Industrials as it retreated from a record on profit-taking pressures.
Tesla is down more than -3% after Bank of America Global Research downgraded the stock to neutral from buy.
Datadog is down more than -3% after Truist Securities downgraded the stock to hold from buy.
Excelerate Energy is down more than -6% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $31.
MicroStrategy is down more than -7%, with the price of Bitcoin is down more than -6% after Wells Fargo Securities downgraded the stock to underweight from equal weight with a price target of $30.
Chip makers are climbing today, with Micron Technology up more than +6% to lead gainers in the Nasdaq 100 after Nvidia said the company is providing it with memory chips for its new GPUs. Also, NXP Semiconductors NV is up more than +2%. In addition, KLA Corp , Intel , Applied Materials , Lam Research , and Texas Instruments are up more than +1%.
Moderna is up more than +11% to lead gainers in the S&P 500 as vaccine makers rally as seasonal flu cases across the US continue to increase.
Carvana is up more than +6% after RBC Capital Markets upgraded the stock to outperform from sector perform with a price target of $280.
Royal Gold is up more than +2% after Jeffries upgraded the stock to buy from hold with a price target of $178.
Inari Medical is up more than +21% after Stryker agreed to purchase the company for about $4.9 billion.
Ulta Beauty is up more than +1% after it said it sees Q4 comparable sales increasing modestly and Q4 operating margin above the high end of a previously expected range of 11.6% to 12.4%.
Lululemon Athletica is up more than +1% after Bernstein upgraded the stock to outperform from market perform with a price target of $460.
Earnings Reports (1/7/2025)
AAR Corp (AIR), Apogee Enterprises Inc (APOG), AZZ Inc (AZZ), Cal-Maine Foods Inc (CALM), Kura Sushi USA Inc (KRUS), Lindsay Corp (LNN), PACS Group Inc (PACS), Richardson Electronics Ltd/Uni (RELL), RPM International Inc (RPM), Simulations Plus Inc (SLP).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policyhere.
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1 ‘Strong Buy’-Rated Growth Stock Wall Street Expects to Soar 140%
With rapid advances in artificial intelligence (AI), the biotech industry may penetrate deeper into many previously unexplored areas of science. Many growing biotech companies are taking full advantage of AI to accomplish this. One such company is the medical device manufacturer Alphatec Holdings , which is now using AI to enhance its innovative spinal surgery solutions.
Alphatec has been in the spotlight thanks to its efforts to revolutionize spinal surgery. Plus, it has demonstrated strong revenue growth and has an innovative product pipeline.
The stock dipped 38.2% in 2024, lagging the S&P 500 Index's gain of 24%. Nonetheless, Wall Street expects the stock to soar to 140% in the next 12 months if it touches its high target price of $22.50. Let’s find out more about this outstanding growth stock.
About Alphatec Holdings Stock
Valued at $1.3 billion, California-based Alphatec Holdings is a small-cap medical technology company that provides a wide range of solutions tailored to spinal disorders. These solutions include implants, biologics, cutting-edge surgical tools, and planning platforms. The company’s mission is to transform the approach to spinal surgery.
Alphatec’s product portfolio includes products used to treat spinal stenosis, compresion fractures, and degenerative disc diseases. It also develops advanced tools to improve surgical outcomes and patient care.
Among its surgical approaches and technologies are anterior cervical discectomy and fusion (ACDF), a procedure to relieve spinal cord or nerve root pressure in the cervical spine; transforaminal lumbar interbody fusion (TLIF), a surgical technique for fusing the lumbar spine bones; prone transpsoas (PTP) and lateral transpsoas (LTP), minimally invasive spinal fusion surgeries.
Thanks to the increasing demand for spinal solutions, the company’s revenue growth has increased consistently. In the third quarter of 2024, ATEC reported significant financial growth, with surgical revenue increasing by 30% and total revenue rising by 27% to $151 million, beating the consensus estimate.
In the quarter, new surgeon adoption stood at 19%, and the company’s procedural volume increased by 20% due to growth in LTP and PTP procedures.
Alphatec is currently not profitable. However, its sole focus on spinal surgery, a rapidly growing market, puts it on track to profitability. Q3 marked ATEC’s second consecutive quarter of positive adjusted EBITDA, which totaled $7.4 million. Its net loss stood at $39.6 million, down from $42.6 million in the same quarter last year.
Green Flags for Alphatec
The medical device market is fiercely competitive, with established players like Intuitive Surgical , Stryker , Globus Medical (GMED, and Medtronic possessing significant resources. Intuitive, in fact, has a dominant position in the robotic surgery market.
Alphatec is expanding its market presence by attracting new surgeons, targeting underpenetrated regions, and improving surgeon training programs. In the quarter, Alphatec trained more than 200 surgeons. Hospitals spend a significant amount of money training surgeons to use these advanced systems and procedures. As a result, high switching costs have given Alphatec a competitive advantage.
In July 2024, the company also introduced EOS Insight, an end-to-end spine surgery platform powered by EOS imaging and AI. This platform combines advanced AI-driven solutions to transform spinal care, providing comprehensive alignment assessments and surgical planning assistance, including the design of patient-specific rods. Management stated that the company has received a record number of orders for EOS year to date, which is why EOS revenue of $65 million is expected for the full year.
The global spine surgery market is expected to grow at a compound rate of 4.9%, reaching $1.49 billion by 2030. Alphatec will see significant growth opportunities due to an aging population, increased demand for robotic surgery procedures, and technological surgical innovation.
The company’s REMI Robotic Navigation System and Calibrate LTX lateral expandable implant system, launched last year, could further help boost the company’s revenue. Alphatec invests heavily in research and development (R&D) to enhance its product pipeline. In the quarter, the company spent $13 million on R&D.
Alphatec increased its term loan capacity by $50 million this quarter. At the end of Q3, cash and cash equivalents totaled $80.9 million. The company’s decision to increase its term loan capacity by $50 million provides additional funds to support strategic initiatives such as R&D and acquisitions. ATEC expects to be free cash flow positive by the second quarter of 2025.
Management stated that the company is on track to meet its long-term revenue target of $1 billion by 2027, with an adjusted EBITDA of $180 million. If Alphatec’s revenue continues to grow at this rate, profitability is within reach. The company updated its revenue guidance, which is now expected to be around $605 million. This includes $540 million in surgical revenue and $65 million in EOS revenue. Positive adjusted EBITDA could be around $27 million, compared to a previous estimate of $22 million for the full year 2024.
Analysts predict Alphatec’s revenue will increase by 25.4% to $605.1 million in 2024, in line with management’s new guidance. Analysts expect revenue to further increase by 20.6% in 2025, while losses will fall to $0.66 per share.
Since Alphatec is not profitable yet, we will look at its price-sales ratio for valuation. Trading at 1.8x forward 2025 projected sales, ATEC stock seems like an affordable, growing biotech stock with high potential in the spine surgery market.
What Does Wall Street Say About ATEC Stock?
Despite the stock’s decline last year, analysts have generally maintained positive ratings for Alphatec stock. Recently, Canaccord Genuity and Barclays analysts recently reiterated their “Buy” recommendation for the stock, citing its strong financial performance, innovative product lineup, and growth potential.
On the other hand, Morgan Stanley analyst Kallum Titchmarsh maintained a neutral stance on the stock, advising investors not to buy or sell it right now. The analyst suggests closely monitoring the company’s progress to assess if its performance matches its projected targets for the coming years.
Overall, Wall Street is strongly bullish about Alphatec stock. Of the 12 analysts covering ATEC, 10 have rated it a “Strong Buy,” one recommends a “Moderate Buy,” and one rates it a “Hold.” Its mean price target of $17.29 suggests the stock can climb as high as 84.5% from current levels. Furthermore, its high target price of $22.5 implies potential upside of 140.1% in the next 12 months.
The Bottom Line on ATEC Stock
The global medical devices market is estimated to reach $957.3 billion by 2030, at a compound annual growth rate of 6.5%. Alphatec’s surgeon-centric innovation, strong financial performance, and strategic growth initiatives have positioned it as a market leader in spine surgery. While profitability challenges persist, the company’s proactive approach to dealing with these headwinds and capitalizing on market opportunities positions it for long-term growth.
For investors with a high risk appetite and longer investment horizon, Alphatec’s stock offers a blend of growth and resilience at a cheaper price.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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Dj Stryker Price Target Maintained With A $425.00/Share By Rbc Capital
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Stryker Price Target Maintained With a $425.00/Share by RBC Capital
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