Why NxStage Medical Shares Dropped

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 specialist NxStage Medical (Nasdaq: NXTM  ) tumbled as much as 10% after receiving a downgrade from research firm, Northland Securities.

So what: Northland Securities, which recently initiated coverage of NxStage Medical in September with a rating of "outperform," downgraded the company to "market perform," sending shares screaming lower. This move comes just four weeks after NxStage reported a much better-than-expected third-quarter loss of $0.04 versus expectations for a loss of $0.06 on a 17% jump in home revenue.

Now what: I've said it 100 times before, and I'm pretty sure I'll say it 100 times more, but it's rarely worthwhile to get bent out of shape or change your investment thesis because of an analyst upgrade or downgrade since they are extremely short-term share price movers. On a valuation level, I would like to see NxStage turn that elusive profit as these losses, while smaller, have to be weighing on shareholders. When NxStage is finally profitable, then I feel it'll be worth a more serious look to the long side.

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