What happened?

Shares of medical devices maker ShockWave Medical (NASDAQ:SWAV) jumped by as much as 10% on Wednesday and closed the day's trading session up by 5.2%. The company did not report any news of note, though, so what gives?

One possible explanation is that ShockWave Medical simply rode the wave of the market today. All three major U.S. market indexes were rising early today but they all ended up giving up some of these gains by the end of the day, with the Dow Jones Industrial Average even closing slightly in the red. 

So what

Investors are used to daily fluctuations in the prices of stocks. And sometimes, securities rise or fall sharply for no apparent reason. When that happens, trying to figure out the catalysts behind these gains (or losses) may not be the best use of our time. Instead, it's important to focus on the investment thesis of the company in question.

In that spirit, let's briefly look into ShockWave Medical's business. Thanks to its intravascular lithotripsy (IVL) technology, the company seeks to transform the standard of care in the treatment of atherosclerotic cardiovascular disease. Lithotripsy is a medical procedure that uses shockwaves to break up stones in the kidney. 

A sequence of upward pointing arrows.

Image source: Getty Images.

Atherosclerosis refers to the buildup of fat and calcium in the arteries, and it can have serious health consequences, including strokes. ShockWave Medical argues that the current methods of treating this condition are inadequate and that its approach that uses shockwaves that safely pass through soft tissue and crack calcium is superior.

The medical device maker sees a $6 billion market opportunity within all the diseases it is targeting, and given that ShockWave Medical only recorded $45.1 million in revenue during the first nine months of 2020 (representing a 57.5% year over year increase), its sales could skyrocket as its technology continues to be successful. 

Now what

Last year, investors took notice of ShockWave Medical and shares of the company soared by 136.2%. ShockWave Medical could have another stellar year as the company awaits word from the U.S. Food and Drug Administration on a premarket approval for one of its products it submitted in October 2020. It might be wise for interested investors to open a position in this healthcare stock before it shoots even higher.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.