Shockwave Medical Inc. [NASDAQ: SWAV]: Not many companies that have gone public this year come close to SWAV in terms of gains. At Friday’s close, SWAV was up by 4.05% on the day and from a look at the daily chart I posted below, it still looks bullish. That’s because, though there was a slight correction in Friday trading, however it still closed the day above the 55-day MA at $58.46. If it holds above this level in pre-market trading tomorrow, then there is a good chance that it could be headed higher when the markets open. The key support level appears to be around the $55 range short term. SWAV’s bullish sentiment is much clearer on the monthly chart, where it has been on a positive trajectory since it went public back around March 7, 2019. Over the past 3 days SWAV has been trying to bounce around the $55 range and it did on Friday which is why it does appear that the bulls have come back into play.
There are a number of fundamentals that support this company’s positive trajectory. The most important one is that the company is well capitalized to continue investing in research and development. During the IPO, the company stated that it will use proceeds from the public sale on research and development, as well the commercialization of its products. With the funding in place, Shockwave Medical appears well positioned to invest in R&D, and also push its existing products much more aggressively in the market.
Besides, even before money from the IPO gets appropriated and help to deliver quantifiable results, the company’s books show that it has been on a strong growth path. Its quarterly revenue growth (yoy) stands at around 449.80%. This is a strong indicator that the market is very receptive of the products that SWAV has to offer. In essence, with more money for product commercialization from the IPO, the company looks to have what it takes to sustain these growth numbers.
From the books, the company seems quite strong in debt management. Reports show it has a current ratio of 10.37. Essentially, this means that the company has enough current assets to take care of all its liabilities within the year, and still have significant assets left in its portfolio. This is a big deal and means that the company is well cushioned from any external factors that may affect its ability to meet its short-term debt obligations. It’s a positive indicator on the company’s prospects. The reason why I also say this is because it shows SMAV has roughly $4.61 Book/sh and $5.13 Cash/sh which seems to be pretty strong.
Analysts too hold a positive view of this stock. Since April, two major analysts have initiated an upgrade. Morgan Stanley initiated the upgrade of this stock to equal weight. Wells Fargo also initiated an upgrade to market perform.
In spite of these positive projections, SWAV does have some risks. For instance, it is in net losses, and its profit margins are still in the negative, standing at about -243%. This essentially means that the company is not making money on its product sales. However, this is typical of growth companies that are still making heavy investments. Also one thing to note is that the stock has made a pretty aggressive run already since it went public back around May 7, 2019. Either way, this is one to keep an eye on in the near term.