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Medical Technology Stock Breaks Out, Sees 28% Revenue Growth



Medical technology stock
Alphatec Holdings(
ATEC) is a new
IBD 50addition and broke out of a base on Monday.
The medical technology company designs, develops and makes surgical equipment for spinal surgeries. The company's implanted parts include titanium screws, rods, fusion components and biologics.
On April 19, it entered into an
Asset Purchase Agreementwith Integrity Implants and Fusion Robotics to acquire assets used in a navigation-enabled robotics platform for $55 million in cash.
Alphatec is ranked No. 22 out of 139 stocks in the medical products industry group. The group ranks a strong No. 39 out of the 197 IBD industry groups.
Medical product stocks got renewed interest following
UnitedHealth Group's (
UNH) June 14 news that
seniors are catching up on postponed surgeries.
Medical Technology Stock Hits Buy Point
ATEC stock popped 8.8% in heavy
volumeon Monday, after Lake Street raised its price target to 32 from 20 and maintained its buy rating.
Shares broke out of a wide-and-loose base, hitting the 17.13
buy point on Monday in two days of heavy volume. ATEC is in the
5% buy zone,
which goes up to 17.99.
The medical technology stock hit a 52-week high on Tuesday and has gained over 44% this year so far.
The
relative strength line hit a 52-week high as shown by the
blue dot on the
MarketSmith daily and weekly charts. ATEC wavered around the
5 0-day moving average during most of the base, until pushing decisively above it as the stock rallied in the last week.
Management Sees Long-Term Sales Growth
Although Alphatec is not yet profitable, annual losses are getting smaller. The company posted mixed first-quarter results on May 4, with a higher-than-expected loss but sales that exceeded analysts' forecasts.
Quarterly sales growth accelerated to 54% from 43% in the last two quarters. The growth came from a 40% increase in surgical volume and an 11% increase in average revenue per procedure.
The company reiterated its 28% projected total revenue growth to $450 million for full-year 2023.
Management also
reiterated its full-year revenue forecastof $555 million by 2025. It initially provided that outlook during its last
Investor Day presentation in May 2022. Management gave a 20% long-term revenue growth outlook, and projected positive operating margin and cash flow in 2025.
The company has dominated market share, with 50% in 2021, up from 30% in 2020. Alphatec is securing regulatory approvals from Australia and Japan, and expects to enter the Japanese market in 2025, according to the 2022 Investor Day presentation.
Management owns a high 17% of the medical technology stock, while mutual funds own 38% of shares. Mutual funds added shares, with 258 funds owning ATEC in March, up from 241 in December and 224 in September.
SPOTLIGHT->ATEC-$18.30