Why Given Imaging Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Given Imaging (Nasdaq: GIVN  )  -- a maker of gastrointestinal diagnostic products, including the PillCam -- spiked as much as 24% following an announcement that the company is looking at ways to increase shareholder value, which could include a sale of the company or a merger.

So what: After the bell Wednesday, Given Imaging made the announcement that it was considering a strategic alternative for the company and has hired Barclays to assist with an internal review of the company. Earlier today, research firm Cantor Fitzgerald came out and opined that Given Imaging could fetch as much as $25 if it's put up for sale, although it maintained its "buy" rating and $22 price target on the stock.

Now what: I happen to really like the technology that Given Imaging produces, but the bottom-line results haven't translated into an attractive stock. Given Imaging has missed Wall Street's profit estimates in three straight quarters and revenue growth has slowed in recent quarters. A buyout just might be the only way to increase shareholder value at the moment since earnings growth isn't doing the job, but I'd just assume to stay on the sidelines and not buy on rumors.

Craving more input? Start by adding Given Imaging to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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