I am seeing the recent price of TransMedics as extremely compelling considering they gave what I would consider to be a blow out earnings report. They had projected 222-230M revenue for the full year, or with one quarter remaining and achieved 241M, which is 11M above the high end of their range. Additionally, the street had forecast EPS of -0.03, and it came in at 0.12
They are saying on the call that the aviation business margins are well ahead of any internal forecasts they had. Revenue was up 22% sequentially, and 159% year over year.
Meanwhile the stock price was $90 on February 16, and is at $83 currently.
There is a trend I am noticing with small cap companies recently, where strong growth and results is not translating to corresponding stock price increases as one may expect. I believe this is a result of 2021 where there were a ton of zombie SPACs that collapsed. Because there were near 100% losses in many of the companies, I suspect analysts have shied away from looking at these names or recommending them to investors.
Eventually though if the fundamentals keep improving quarter over quarter like with TransMedics, the price of the stock will rise. It may take some time for the market to catch up but I believe this company could become a multi bagger from current levels fairly quickly. Some recent examples of companies like this are Super Micro which was previously at 5B a year ago and is now at 50B market cap. Or Sound Hound which was a 500M company earlier this month and is now at 1.5B
There’s a number of other small cap growth names which I am seeing this phenomena of looking mispriced, and a lot of potential opportunities to get some solid growing companies like TransMedics at a reasonable price.