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Natus Medical Inc. Message Board

  • sfasfds sfasfds Nov 7, 2005 10:17 AM Flag

    The fall begins

    Sanity returning to the stock. Sticking by my prediction of $15 by the end of the week. Need to think about my end of the month prediction. See earlier sum of the parts analysis - which gets you to 11.50 range. Not sure if we'll ge there this month though.

    Key fact - this company is growing in the single digits and deserves a PE in the low 20s at best. Bought a 0 growth company that traded at a 12 PE (net of cash). Just because BABY owns it, it doesn't now deserve a 30 PE!! Remember the conglomerate mania of the 60s, it was exactly this foolish thinking that fed it, and people are falling for it again with BABY.

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    • I'm not pumping at all. Take profits now. Market's up, this POS is going?? Going lower!

    • you keep pumping this stock to go down,but it's still holding up at well,give up already will you,sit back and watch it go higher on friday

    • Large insider sales the last couple of days. Most of it by CEO Hawkins. Profit taking? Time to slowly ease out and buy back at a later date.

    • Nierenberg sold in '04 in the $14 to $15 range. He had been buying in the $8 range before.

      Maybe I'm missing something, but any way you slice it, using the company's '06 estimates and existing estimates for BLSC '06 sales as a standalone company and you get organic growth on existing business in the single digits. This isn't my projections, this is management's numbers.

      In order to justify this valuation, you have to believe that management is going to be master deal makers, but it is always a bad sign when you have to count on acquisitions for growth.

    • The technicals may indicate a short-term sell, but Baby has been volatile lately that the charts may not indicate its long term trend.

      Well, I disagree that the stock will fall down to the $11.50 range. I also do not believe the company will grow in single digit rate.

      Only idiots will spend 66 millions to buy another company with zero growth potential. Natus managements are not idiots. Their previous purchase has proven that they are smart investors and have solid growth strategy in mind... No Bullshit.

      The growth will come as both merged companies cross-sell their products. This means Natus can sell products into BLSC customers and vice versa. This has trenmendous growth potential. You don't just get the combined growth of both companies but has the potential to increase your sales revenue anywhere from 20 to 50%, depending on how much you can sell and much newer products you can offer. Natus didn't just buy another company, they also bought a new set of customer base.

      Let's see what they have to say in the Nov 10th presentation for Noble Financial Group Small-Cap Conference. If everything goes well, we'll have new investors and see the stock going up again - else stock will trend lower.

      My prediction is that the trading range will be between $15 to $20. With the average volume in hundreds of thousands and the stock price in teens, I think the stock can be easily manipulated by traders.

      • 2 Replies to ujohn
      • BABY management is very smart with its BLSC acquisition. They are smart bc they realize the market is dumb. Pay about 13x earnings for a company (net of their cash), then hope the market assigns the multiple your higher growth business gets and you've just doubled your money. Nice trick. Read George Soros' book where he discusses how this strategy was used in the 60s conglomerate boom to create fictious growth. Evenutally people come to their senses and realize no real value has been created.

        In terms of synergies, these guys are in totally different lines of business other than sleep monitoring. I was a BLSC investor, that's why I know. Neuro monitoring is a completely mature, low innovation business. Gross margins are high because companies need to make enough to support considerable sales and support costs, but these markets are growing at low single digits.

        Maybe you shave a few percent of SGA and you get a couple percent more in growth from corss selling, but nothing to justify the huge run the stock has been on. And nothing to suggest organic growth will be above the single digits.

        The only big benefit of the acquisition is that BABY took out their main competitor in hearing testing. But, I'm sure this won't last more than a year. If tiny BLSC with a non-existant R&D budget coule rip off their device, surely some other company is working on this as we speak.

        BABY's main product is hearing testing in the US. I anticipate they start to see declining revenue as competitors come in and the price declines and share declines. This is economics 101. You can make all the acquisitions you want, but at the end of the day, if I'm paying a forward PE of 30x, I like for a company to have real growth ahead, not declining sales.

      • Your line of thought is amazing. You want to take growth

        Check BOO revenue growth
        Check NTRI revenue growth
        Check FORD revenue growth

        Do you want to talk eps


        Are you getting the point. The stock price got ahead of itself. There is no justification for this runnup except momentum. Hold onto your shares and remind me when the stock is in the 14 range.

        Good luck to you

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