Shares of Natus Medical (NASDAQ: BABY), a leading manufacturer of medical devices for newborn care providers, fell 16.1% during early-morning trading after issuing guidance for 2019 that was below expectations. The stock was down 15.2% as of 11:13 a.m. EST on Wednesday.
When Natus Medical announced fourth-quarter earnings this morning, the headline results were mixed. Revenue rose $5.2 million further than consensus forecasts were predicting, to $141.0 million. On the bottom line, adjusted earnings that reached $0.43 per share missed expectations by $0.06 per share.
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The earnings miss upset investors, but not half as much as the management's softer-than-expected outlook for 2019. Investors were expecting adjusted earnings to rise from $1.42 per share in 2018 to $1.64 per share in 2019. Instead, Natus thinks adjusted earnings could fall into a range between $1.12 per share and $1.49 per share this year.
During the third quarter, Natus launched the Otoscan machine, a digital scanning device that maps out an infant's inner ear in order to produce new hearing aids that should fit perfectly. Natus invested heavily to install Otoscan units, and it appears to be working as hoped. During the fourth quarter, Natus placed 120 more Otoscan devices, bringing the total to 180 in the field.
Now probably isn't the time to start a long position, but it isn't time to jump ship, either. Looking into next year, Otoscan and recently launched products in the neurology and newborn care segments could allow Natus to return to growth.
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