Why Nxstage Medical Shares Are Moving

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 dialysis products specialist Nxstage Medical (Nasdaq: NXTM  ) popped 10% today after its third-quarter profit topped Wall Street expectations.

So what: The stock has been crushed over the past year on a string of disappointing quarters, but today's bottom-line beat -- per-share loss of just $0.04 versus the consensus loss of $0.06 -- suggests that things are beginning to turn around. While its Critical Care segment continues to be hurt by weak hospital spending, a 17% jump in Home revenue seems to be reigniting some optimism over its growth prospects going forward.

Now what: For the fourth quarter, management now sees a per-share loss of $0.04-$0.06 on revenue of $63 million-$65 million, which is pretty much in line with Wall Street estimates.

"We remain committed to increasing adoption of home, more frequent dialysis, and see multiple catalysts for growth," said founder and CEO Jeffrey Burbank. "With continued execution, we believe we can achieve over 14% annual growth in the Home for 2012."

More important, with the stock still off about 50% from its 52-week highs, there's plenty of upside left to benefit from that growth.

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