Please ensure Javascript is enabled for purposes of website accessibility

Why Natus Medical Incorporated Stock Lost 19% in January

By Demitri Kalogeropoulos - Feb 8, 2018 at 3:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A sales growth warning rattled investors last month.

What happened

Healthcare product specialist Natus Medical (NTUS 1.15%) trailed the market last month, falling 19% compared to a 6% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX Chart

^SPX data by YCharts

The drop left shareholders' returns well below the market's since early 2015, but the stock remains in solidly positive territory over wider time frames, including the past 5-year and 10-year periods.

So what

January's decline was powered by a warning, issued early in the month, that sales were tracking below management's expectations. On Jan. 8, CEO Jim Hawkins and his team said fiscal fourth-quarter revenue would be between $131 million and $132 million, compared to their late-October guidance range of between $145 million and $147 million. Executives blamed weakness in Natus Medical's neurodiagnostic and optometric units for the shortfall, in addition to challenges associated with the rollout of a new IT system .

Clinical scientists examining a petri dish under a microscope.

Image source: Getty Images.

Now what

Hawkins and his team forecast a challenging year ahead, with sales growth likely slowing to an 8% pace from 31% in 2017. Management is excited about prospects for its new digital ear scanning technology called otoscan, but while the costs for that launch will impact profits in 2018, revenue likely won't be lifted until at least the second half of the year.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Natus Medical Incorporated Stock Quote
Natus Medical Incorporated
NTUS
$32.65 (1.15%) $0.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.