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
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