Tuesday, February 22, 2011

NxStage Medical Inc (NASDAQ: NXTM) Q1 2011 Price Target

Recent price: 22.58$
P/E Ratio: -
3 Months Target Price: 24$

Company Description
NxStage Medical, Inc. (NXTM) is a medical device company that develops, manufactures and markets products for the treatment of kidney failure, fluid overload and related blood treatments and procedures. Its product, the NxStage System One (System One), was designed to satisfy an unmet clinical need for a system that can deliver the therapeutic flexibility and clinical benefits associated with traditional dialysis machines in a smaller, portable form that can be used by healthcare professionals and trained lay users alike in a range of settings, including patient homes, as well as more traditional care settings, such as hospitals and dialysis clinics. NxStage markets the System One to dialysis clinics for chronic hemodialysis treatment, providing clinics with access to a developing market, the home hemodialysis market and the ability to expand their patient base by adding home-based patients without adding clinic infrastructure.

Confidence Margins
Strong resistance $27.12 (+20%)
Light resistance $24.48 (+8%)
Light support $20.05 (-11%)
Strong support $18.95 (-16%)

NxStage Medical saw it's stock price plunge a few weeks after it released it's fourth quarter and full year results. They seemed disappointing until the company provided guidance for the year 2011. There seems to be quite some upside left in this company until the next quarterly filing.

Entry strategy
For the cautious investor:
Buy the stock for 23$ or less and keep the light support on check as it will indicate a stronger downtrend if the stock gets to go lower.

For the risk-taking trader:
A position in NxStage Medical that seems very promising is the June 2011 22.50$ call options. They can be purchased for about 310$ per contract. The bid-ask spread is pretty high so it would be wise to place a bid slightly higher than the current one so not to overpay this position.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 24$, or keep it until 27$ if it climbs passed the light resistance and your own analysis is more bullish.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 24$. This should provide a very interesting return if the underlying reaches the target price as the contracts will get in the money.

No comments:

Post a Comment