Penumbra Inc (NYSE:PEN) is about to launch its initial public offering (IPO). Penumbra is a biotech stock to watch; making medical tools including those used in neurological and vascular system surgical applications. The IPO is expected to bring $122.4 million at about $28.00 per share (according to NASDAQ) with a launch date being September 18, 2015.
The Alameda, California-based Penumbra is a small company. Despite its size, it has breakaway potential thanks to its newly developed and FDA-cleared ACE64 aspiration thrombectomy device, a miniature device that removes blood clots. Or in simper terms: an anti-stroke device. This is nothing short of a revolution in addressing the treatment and risk of stroke, which is one of the leading causes of disability in adults.
This is just one of the tools that will set this biotech stock apart while ensuring short- and long-term growth.
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Should you invest in the Penumbra IPO? Unlike many biotech and pharmaceutical companies that have either filed an IPO this year or taken part in a merger, Penumbra’s focus on special devices gives it higher upside potential. This is because it is addressing a growing demand from healthcare providers.
The SEC filing says that Penumbra will involve approximately 4.4 million shares with the IPO price being set anywhere between $25.00 and $28.00 per share. This is a reasonable entry price into what is a fast-growing company, which has accumulated many profitable quarters—unlike many indebted companies, which use IPOs to raise cash.
Penumbra saw $2.2 million profit in 2014 from revenue of $125.5 million. (Source: Yahoo Finance, last accessed September 18, 2015.) However, it managed to record $81.3 million in revenues in the first half of the year (up to June 30, 2015) compared to $57.6 million in the same period of 2014. In other words, this is around 50% higher.
The biomedical device industry is going through an active period with at least eight companies having filed IPOs in the sector this year alone. The sector is said to potentially be worth some $133 million by 2016.
One of the reasons for this sector’s growth is the lower risks and costs associated with development. Medical devices are cheaper to bring from the drawing board to the market than is a drug candidate.