Hold: IntriCon (IIN) and AxoGen (AXGN)
We’ve seen an uptick in volatility this week and momentum has stalled in a few of our positions, especially in the medical device arena. It’s a little hard to tell if the action in these stocks is due to emerging weakness in small cap healthcare stocks in general, or if it’s more stock specific. The chart for the small cap healthcare ETF suggests it could be a sector move (look at the surge in trading volume) …
… and the vast outperformance of this sector year-to-date (up 44%, which is 32% better than large cap healthcare and roughly 30% better than the next-best performing small cap sectors) supports the notion that a pause, if not some profit taking, could make sense.
What’s clear right now is that two of our medical device stocks have begun to look a little shaky. Today we’ll pull back on the reins and move these stocks from buy to hold, at least until the path forward becomes more clear.
IntriCon (IIN) tore higher from May through August with only a few notable pullbacks. It looks like it’s time for the stock to pause for a bit. Shares topped out at just over 75 last week and have since dropped down to their 50-day moving average line after an analyst moved from buy to hold, citing valuation. I don’t think the long-term growth story is dinged at all but given how far shares have run it makes perfect sense that they should take some time to digest their gains. I’m not ready to take profits just yet, so let’s move to hold and see how the next few days shake out. HOLD.
AxoGen (AXGN) caught a nice updraft in mid-August but momentum stalled just shy of the stock’s 50-day moving average line (near 46) and shares have traded down in six of the last eight sessions. They’re now trading near their 200-day line again. Management will be participating at a hand surgery conference in Boston Thursday through Saturday where it will give an update on its RANGER study, which is the largest contemporary study in peripheral nerve repair (over 400 surgeries). I expect AxoGen will put out a couple of press releases related to the event, so stay tuned for updates on those. With shares clearly acting weak right now I’m going to move to hold regardless of what information may or may not be released over the coming days. HOLD.