Why AtriCure (ATRC) Could Be Positioned for a Slump

Zacks Equity Research
March 31, 2014

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is AtriCure, Inc. (ATRC), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #5 (Strong Sell) further confirms weakness in ATRC.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 3 estimates moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus loss estimate to widen, going from a loss of 48 cents a share a month ago to its current level of a loss of 80 cents.

Also, for the current quarter, AtriCure has seen 2 downward estimate revisions versus no revisions in the opposite direction, widening the consensus loss estimate from a loss of 11 cents per share to a loss of 19 cents per share over the past one month.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.94% in the past month.

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.

If you are still interested in the medical products sector, you may instead consider some better-ranked stocks including Meridian Bioscience, Inc. (VIVO), William Demant Holding A/S (WILYY) and SurModics, Inc. (SRDX). All these stocks hold a Zacks Rank #2 (Buy) and may be better selections at this time.

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