Why Cyberonics' Shares Jumped

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 implantable medical device maker Cyberonics (NASDAQ: CYBX  ) jumped as much as 10% today following the announcement that a lawsuit had been dropped against the company.

So what: The lawsuit, brought forth by Andrew Hagerty, a former sales representative of Cyberonics, had claimed wrongful termination and included, according to an Associated Press report, "allegations of broad-based improprieties in terms of sales and marketing practices at the company." Today, Cyberonics announced that the lawsuit was voluntarily dropped, although the company notes the suit could be refiled at any time and he may pursue a resolution through arbitration.

Now what: One lawsuit may not seem like much, but the simple fact that it's gone, especially when the suit had damaging sales and marketing allegations mixed in, is a big plus for Cyberonics. In terms of the company itself, I see strong demand for its vagal nerve stimulation therapy system as the population ages, but I have a hard time getting over the valuation hump with Cyberonics at 26 times forward earnings after today's pop. If the economy were in better shape I might have more lenience, but even after today's jump I'd rather stay on the sidelines.

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

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. In our free report "3 Stocks That Will Help You Retire Rich," we name stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2234545, ~/Articles/ArticleHandler.aspx, 10/20/2014 8:52:36 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement