Hello investors, I’m back with an analysis of another small cap gem. Today we will be taking a look at Biotelemetry, Inc. (NASDAQ: BEAT). A positive Q2 ‘17 as well as recent acquisitions brought this stock into the spotlight. Let’s dive in and lay down the bullish case for this stock.
Biotelemetry was formerly known as Cardionet. In April of 2013, they restructured their business model to support more growth, and changed the company name. The company specializes in mobile patient monitoring. Their devices track patient’s’ heart data and can wirelessly report this data to doctors. Currently, their devices monitor over 550,000 patients. Biotelemetry creates tech that will support a futuristic model of patient monitoring through wireless and automated solutions. Most patients, as well as healthcare employees, would likely prefer to spend less time in the hospital. This tech enables both patient and provider to be in remote locations, while still using the same high end instrumentation present in hospitals.
The company also recently acquired swiss company LifeWatch. Lifewatch creates similar products and this acquisition helps cement Biotelemetry’s position as the leading provider of wireless cardiac monitoring tech, and has given the company a global influence.
In addition to their futuristic vision, the company boasts strong fundamentals. The company trades at a 22.7 trailing P/E ratio, sitting below the industry average of 44.6. The current P/E ratio of the S&P500 is 21.9. In Q2 of 2017, the company reported their largest revenue quarter ever at 58.1 million, as well as raising earnings guidance for 2017. This is very impressive considering the company was also completing an acquisition during this time. Annual revenue and gross profit have increased year over year since 2012. (All financial data sourced from morningstar.com).
As always, I believe it is important to take a look at the company’s management in order to evaluate their expertise. Joseph H. Capper is the president and CEO of Biotelemetry. Capper has a lengthy resume composed of both management and healthcare experience. He has served Biotelemetry since 2010, and has held an executive management position for 17 years. Companies he has served include Bayer, Home Diagnostics Incorporated, and CCS Medical Holdings. At Bayer, he served as National Sales Director for the diabetes care division. Under his guidance, his team garnered over 350 million in sales. Clearly, Biotelemetry is in good hands with this executive leading the charge.
Fundamentally, I believe this company is poised for growth. Long-term investors should be happy to own shares at the current price. It is still important to consider a company’s technicals in case a better price point could be in store, or traders are looking for a short term swing. The RSI for this stock currently sits at 55. This would indicate the stock is not oversold, nor overbought. However, the stock is 7.35% above its 50 day moving average, and 30% above its 200 day moving average. While this is a significant margin, the stock has been experiencing positive price action due to the Q2 report, so this is negligible in my opinion. The stock sits 5.5% below its 52 week high. Of the outstanding shares, 9.7% are being shorted. While this isn’t a large short ratio, it is still enough to trigger a small short squeeze.
Oftentimes, institutional investors overlook small-cap stocks in lieu of more popular blue chip stocks. In my opinion, biotelemetry has not gained nearly enough attention. Investors seeking long term aggressive growth and exposure to the healthcare sector should strongly consider adding BEAT to their portfolio. The rapid expansion of the companies profits make this stock a real diamond in the rough.
Disclosure: I have no positions in BEAT nor will I initiate any in the foreseeable future.