Neuropathy: Diagnostic Gains
10/14/2005 12:00 am EST
Jim Collins uses a proprietary quantitative system to isolate momentum-based stocks poised to outperform. One important metric in his analysis is relative strength, and on this measure, his latest featured stock, a medical diagnostics firm, earns a top 99 rating.
"NeuroMetrix ( NURO NASDAQ) designed, develops, and sells proprietary medical devices used to diagnose neuropathies. Neuropathies are diseases of the peripheral nerves and parts of the spine that frequently are caused by or associated with diabetes, low back pain, and carpal tunnel syndrome, as well as other clinical disorders. The company has developed the NC-stat System for the performance of non-invasive nerve conduction studies at point-of-service.
"In other words, the company’s technology provides physicians with an in-office diagnostic system that enables them to make rapid and accurate diagnoses that are cost-effective for the patient and third-party payer. The NC-stat System is comprised of disposable biosensors that are placed on the patient’s body, a monitor, and a docking station. The biosensors are single use, self-adhesive, nerve-specific patch-like devices that are placed on the body and connected to the monitor.
"The monitor then analyzes neuro-physiological signals collected from the biosensor and displays the pertinent results. The company also sells an optional device that enables the physician to transmit data to the company’s on-call information system, which formulates the data it receives for each test into a detailed report that is sent to the physician via fax or e-mail in three to four minutes and aids in the diagnosis.
"In March, the company announced that it had entered into a strategic relationship with Eli Lilly to improve awareness and detection of diabetic peripheral neuropath, a form of nerve damage that is one of the most common chronic complications of diabetes. Through the agreement, NeuroMetrix and Lilly will conduct a broad series of educational and developmental programs across the country.
"For the quarter ended June 30, the firm reported breakeven results, compared to a loss of $1.12 per share in the prior year. Revenues increased 88% to $8.1 million. The strong financial performance was particularly driven by the primary care physician market, where NeuroMetrix experienced 230% growth in biosensor usage on a year-over-year basis. The stock reached an all-time high in mid-August before retreating modestly. Banks and mutual funds own 33% and management owns an additional 44% of the shares outstanding."
Editor's Note: As we go to press, Price Headley, editor of BigTrends.com Aggressive Stock Trader, has issued a new "trade alert" for his swing trade portfolio for NeuroMetrix. He notes, "Buy NeuroMetrix at 32.90 or lower. Our target is 42, with a closing stop at or under 30.88. NeuroMetrix shares had a fantastic year, but took a brief pause over the last two months. That, however, appears only to be a consolidation period, as the stock has broken above that trading range and has moved on to new 52-week highs again. The signal, however, is a close above the upper Acceleration Band. The last time we got a fresh acceleration signal like that was in April, at the beginning of a huge run."