The Company is in the business of producing cost-effective medical devices that are proprietary, disposable and for hospital use.
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Recs
This stock has been flat, with investors waiting to see what will come of the frivilous FDA investigation that has gone on over the last few years. In the meantime it has announced strong earnings over the last year and increased its dividend three times in the last 12 months, for a total increase of 22%.
A year from now, it is unlikely the FDA investigation will be remembered and UTMD will be back to its profitable ways.
Hi, spearnick.
I thought the FDA investigation was pretty much concluded -- the resolution having already been priced in last year's 25% price appreciation. My model calls UTMD fairly valued at these levels now. What do you see that I don't?
Thanks!
Tim
Tim,
Thanks for the check. My comment was poorly worded. The stock did jump significantly when the FDA investigation was concluded, however, I believe that investors are still somewhat wary of how the investigation may have affected future earnings power. UTMD stated (in a press release dated August 31, 2004) shortly after the investigation was begun that it had lost sales to previously loyal customers. Have those customers returned? Or has UTMD permanently lost customers who may have found quality sources elsewhere?
The stock has trailed the S&P ever since its runup on the FDA investigation news. I believe that is partly a natural correction after the climb, but I believe it is partly due to a need for investors to see how UTMD looks now that the investigation is over. I believe that UTMD will recover fully and reward investors for their patience, even from these levels.
Spearnick