Natus Medical Incorporated, (BABY) develops, manufactures, and markets neurodiagnostic and newborn care products. Its products are used for the screening, detection, treatment, monitoring, and tracking of common medical ailments, such as hearing impairment, neurological dysfunction, epilepsy, sleep disorders, and newborn care. In addition, Natus provides software systems for managing and tracking disorders and diseases for public health laboratories.

The company’s customers include hospitals, clinics, laboratories, physicians, nurses, audiologists, and governmental agencies. It sells its products through a direct sales force primarily in the United States, as well as through distributors worldwide. The company was founded in 1987 and is headquartered in San Carlos, California.

Natus Medical has stellar fundamentals led by strong sales growth and ever expanding operating margins. The company recently announced that the latest quarter’s revenue increased 41 percent to $39.9 million, compared to $28.3 million reported in the comparable quarter of the previous year. Net income increased 62 percent to $3.8 million, or $0.15 per diluted share, for the second quarter of 2008, compared with net income of $2.3 million, or $0.10 per share, for the second quarter of 2007.

The stock is in an Elliott Wave-4 buy formation, projecting gains into the $19 per share by the end of October. The company does have a liquid options market that currently extend out to April of 2009 allowing the options strategist more than enough time to trade this potential bullish opportunity.

Figure 1: Daily Elliott Wave-4 Buy Pattern for Natus Medical
(Source: Profit Source)
Click here for larger view

Happy Trading.

Jeff Neal 
Senior Writer, Options Strategist & Profit Strategies Radio Show Market Correspondent
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