Why Shockwave Maternity Stocks Are Up 18% This Week

According to Standard & Poor's Global Market Intelligence(S) &P Global Market Intelligence)The data provided.Shockwave Medical (NASDAQ resonance code: SWAV)Shares of the stock were up sharply this week, soaring as high as 181 TP3T, and as of Thursday's close, the stock was still up 15.91 TP3T.

The springboard that sent the homeopathy equipment specialist higher was rumors of a proposed acquisition and a bullish report from a Wall Street analyst.

The Heart of the Matter

As first reported by the Wall Street Journal, the herbal healthcare giantJohnsonfirms(NYSE: JNJ)has offered to buy Shockwave Materia Medica. If an agreement can be reached, the deal could be finalized in the next few weeks, according to the report.

Johnson & Johnson has made no secret of its plans to expand its medical device business. Shockwave Medical, which has an IVL guide that removes calcium from artery walls, would be a logical choice. Notably, neither company has confirmed or denied this rumor. Investors are betting that if the deal comes to fruition, it will likely be at a high premium, which has increased demand for the company's stock.

Another driver came from analysts at CL King, who have rated the stock with a buy rating and a $368 price target. That would represent additional upside of 14% from the stock's closing price on Tuesday. The analysts' reasoning behind this move has not been made public.

Waves of Passion

Shockwave Medical's positive analyst coverage and price target increase created a real buzz after the company announced its Q4 results last month, with $203 million in revenues up 41% year-over-year, and earnings per share (EPS) at $1.16.

Based on analysts' consensus estimates, revenue was $199.45 million and earnings per share were $0.89.

Gunn also issued a strong forecast for 2024, projecting revenues of approximately $920 million, a 26% increase at the midpoint of its guidance, above Wall Street expectations of approximately $919 million.

Recent insurance company reimbursement wins may help boost future performance.

With a P/E of 84x and sales of 17x, Shockwave Therapy is not cheap, but its business has started to grow and it seems that even Johnson & Johnson thinks it is worth it.

Should you invest $1,000 in a Shockwave Therapy company now?

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Danny Vena owns shares of Shockwave Medical. the Motley Fool owns and recommends Shockwave Materia Medica. the Motley Fool recommends Johnson & Johnson. the Motley Fool has a disclosure policy.

Why did Shockwave Materia Medica shares rally as high as 18% this week?