As seems to be the case so often with med-tech, quality doesn't come cheap. Oh, sure, you can occasionally find stocks like Kinetic Concepts
In the case of today's subject, leading sleep and respiratory company Respironics
Now, the company's fiscal second quarter was plenty good. Sales climbed 14%, the gross margin improved a bit, and net income grew by 20%. Breaking it down a bit further, the large domestic sleep business saw sales up more than 15%, while the hospital business grew almost 13% and the international efforts added 13% growth.
And the industry itself is still in fine shape. It would seem that a large segment of the patient population is untreated -- perhaps in excess of 85% -- so there are still plenty of patients left to treat. Furthermore, the growing obesity trend plays right into Respironics' wheelhouse, because sleep apnea is often a consequence of obesity.
Though rival ResMed
Even with all those positives in mind, though, I can't really recommend the stock. So it would appear that we have another case of great company/not-so-great stock. But that's the way it often goes in med-tech land -- you get a chance every now and then to get good stocks at good prices, but quality companies don't stay cheap for very long.
For more medical missives:
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
