Update on Heartware

I mentioned this fabulous stock here (HTWR) in a write up in Mid March.  Tuesday it had a monster gap and I initiated a position so i'm discussing it a bit further.

On Monday, the company reported earnings.  They had 87% revenue growth and a loss of 87 cents per share.

That loss was better than expected, but it was still a large loss!  They recently beefed up their funding in March offering 1.5 million additional shares.  We have to keep in mind that this company is really burning through cash.  More share offerings are likely in the future.  I suppose we could argue that means future opportunity.  Especially if these devices become a staple in heart failure patients in the future.

This quote from the Conference Call Transcript (via seekingalpha), in my opinion, sums up the power of these devices.

"As one pediatric cardiologist said to me once you send a child home and they go to school with their VAD you never want to go back to the days of keeping them in the hospital for six months while they wait for a transplant." 

I read this as, as long as the devices work, they have staying power.  Executives and analysts alike spoke of the generally positive reception from physicians throughout the conference call.

There is obvious downside if these systems have issues or better solutions to heart failure come along, but we have no way of knowing one way or another.  That said, let's look at the updated chart.

We see the gap was pretty tough to buy as it's right at major resistance.  Maybe i'm just flat out wrong, but I've found the tougher it is to buy a big gap up, the more you should consider buying it.

We don't have the major price signal yet, but we received a decent one from the 8 month wedge breakout.  That gives us a target in the mid 110's.

The price indicators don't really add much at this point, other than relative strength breaking the downtrend that started at the September highs.

All in all, I continue to like this name and it's potential to start a new up trend and really move over the next year or so.  We'll see how it plays out.  Good luck out there!

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