Sell: ABIOMED, Inc. (ABMD 105)
From Cabot Growth Investor
Updated from WSBI 785, September 21, 2016
ABIOMED, Inc. (ABMD) had been in pretty good position ahead of its earnings tomorrow morning, but the stock sold off yesterday and today it came completely unglued. Poor earnings reports and reactions from fellow medical firms Edwards Lifesciences and (to a lesser degree) NuVuasive caused investors to punish ABMD from the opening bell. (We also think a lot of it had to do with the general market, as the sellers finally came around for most resilient medical device stocks that had been holding up. Nevro (NVRO), which had been on our watch list, also cracked today. Of course, it’s always possible that ABIOMED’s own report will be just fine and lead to some sort of relief rally, but regardless, we’d use that bounce to sell into; today’s break was big and, coming after a decent run in recent months, almost surely tells us that a prolonged base-building effort is needed from here. The bottom line in these types of meltdowns is that
you want to make sure that what is obviously a bad situation doesn’t get much worse. We bought ABMD a bit under 116, so the end result likely won’t be a huge loss, which is key. But there’s little question the stock’s uptrend is over, so we advise cutting the loss and holding the cash.
WSBI Editor’s Note: ABMD missed earnings forecasts by $0.04, and the shares have not recovered to their previous level.
Michael Cintolo, Cabot Growth Investor, www.cabot.net, 978-745-5532, October 26, 2016