Vital Signs – Vital For Your Portfolio
Vital Signs is a medical device maker that manufactures products for
anesthesia, respiratory and sleep disorders. Considering it operates
in the health care part of the market and despite the recent market
decline, the stock has done extremely well this year, moving up over
17% through last week.
The company’s net income was up 55% and 20% YOY respectively in 2004
and 2005 and while annual revenue has remained flat, the company
carries no long term debt and is sitting pretty on $108 million in
cash. Vital Signs is a tightly run company, with controlled costs and
a high percentage of insider and institutional ownership. The current
CEO Terence Wall, is also the founder of the company and despite his
status within Vital Signs, he makes a base pay less than that of the
lowest paid of the 4 top execs at Respironics.
Despite being a smaller player than Respironics (their major
competitor), they have not only gained market share, but also kept
their profit margins and operating margins much higher than
Respironics.
Technically, the chart of Vital Signs is a thing of beauty. It
recently bounced off its 200 day moving average and stands at around
10% off its all-time high. Historically, VITL has had a tendency to
trade at up to 25 times earnings, which means if earnings growth
remains at the currently estimated 13%, the stock may have another 10%
upside from these levels. There is one happy exception though – the
stock gets bought out – in which case, it could move 15-20% in a
single day.
– Faisal Laljee
havent seen you detail Lifecell.
i have been working on LIFC for
most of the month of June.
Lifecell might have about
10 growth drivers instead
of the 2 at the superficial
surface. for this reason,
Lifecell might be able to
trade at same price to sales
ratio as ISRG, which is
57-70x last quarters sales per share. Lifecell is running about
$1 sales per share quarterly,
with the same gross profit %
of sales.
thus $57-$70 might be
in store for LIFECELL.
10 Growth Drivers
1. Hyserterocmy reconstruction.
2. Breast reconstruction
3. cosmetic(no marketing) `07
taboo becasue of tissue donors.
4. breast augmentation
290K US Procedures
$300m-$600m `07
5. at core: Lifc is a
cryogenic specialist
with stretched patent
portfolio time line
6. niche blood storage
7. pig tissue sourcing
raised gross profits
10% from 70% to 80%
`07
8. vascular grafs
9. critical component of
next generation tissue
engineering cocktails.
ie. stem cell companies
use Lifecell’s acellular
matrix as a
“mesh” “frame” “foundation”
to insert sensitive,
delicate stem cells to form
newer tissues and possibly
organs.
10. International business
underrated and under
estiamted by analyst
estimates.
the first 2 drivers support
the idea, that if sucessful
the eps would pump up to
$1-$2 and thus the shares
would trade as a growth stock
around $25-$50. but what
about the other 8?
i would interested
to see what are your long term
bullish thoughs, if any,
on ISRG.
While ISRG has a unique product, I believe the stock may have run its course for now and may be headed lower. As is the case with most biotechs and medical device companies, it is hard to predict long-term growth.
– Faisal Laljee
Faisal, if your going to dump
it atleast allow it to run back
towards the high end of the
$90-ish / $135-ish base.
Jeffries, in early June said
they did channel checks and say orders and installations will blow out
high end street estimates in
the June quarter. I suspect
the late July eps report
and guidance
would allow it to make a run
towards $130-$140 , if not
fuel a breakout of 20%.
I admit its had a stellar run
from breakout of $30s to $140,
but hospital penetration is
only 2% of world’s top 20,000
hospitals.
see concrete points at
post…
6-15 Intuitive Surgical – ISRG Review
Between now and earnings, I suspect the stock will head into the high nineties. I do like your bullishness though.
check out how
ISRG preception unintentially
“crushed” valuation
appeal for Lifetime fitness.
6/18 testing the trend.