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Bull of the Day: BioTelemetry (BEAT)

Zacks

BioTelemetry (BEAT) is a $1 billion provider of cardiac monitoring equipment and services with an emphasis on mobile and wireless capabilities.

The company is focused on advancing mobile and wireless health services by providing leading technology and services that help healthcare providers monitor and diagnose patients and clinical research subjects in a more efficient, accurate, and cost-effective manner.

The stock has been a Zacks #1 Rank Strong Buy several times this year due to steadily rising sales and EPS growth estimates.

After the company's second-quarter report in early August where they beat the consensus and raised guidance, Wall Street analysts raised this year's profit projection 19% from $0.88 to $1.05, representing 24% annual growth.

And next year's EPS target climbed 18% from $1.24 to $1.46, for a whopping 39% growth trajectory.

The profit outlooks are driven primarily by strong sales growth of 37% this year and nearly 36% projected for next year.

How Does BEAT Make Money?

Speaking of top line growth, those sales totals for this year and next are $286 million and $388 million, respectively.

The company's primary source of revenue is not in devices, but in the service fees charged for wireless and remote healthcare monitoring. Currently, BioTelemetry estimates that the market for its services is between $1.5 and $2 billion.

Speaking with Jim Cramer on Mad Money last month, Joseph H. Capper, President and Chief Executive Officer of BioTelemetry, gave those figures but then said that as his company enters the age of "connected health," the market could be much larger.

LifeWatch Acquisition

In July, BioTelemetry completed its acquisition of Switzerland-based LifeWatch, a leading healthcare technology and solutions company, specializing in advanced digital health systems and wireless remote diagnostic patient monitoring services. LifeWatch’s services provide physicians with critical information to determine appropriate treatment and thereby improve patient outcomes.

In completing the acquisition and making the company the largest global provider of remote cardiac monitoring and diagnostic services, BioTelemetry looks well-positioned in the rapidly evolving connected health market and expects to serve more than a million patients in 2018.

CEO Capper was quoted in the company press release saying “This acquisition strengthens our preeminent position as the leader in wireless medicine, creating the foremost connected health platform, significantly enhancing our ability to improve quality of life and reduce cost of care.”

Apple Threat?

As Apple (AAPL) expands its entry and offerings in healthcare monitoring and services with its flagship Apple Watch, some investors have been concerned that BioTelemetry will not be able to compete with such a successful and cash-rich technology juggernaut.

But the company and analysts are confident that innovations from Apple will only expand the entire market and raise both awareness and demand from physicians, patients, insurers, and healthcare legislators about the cost efficiencies and improved care that wireless monitoring delivers.

I've been recommending the purchase of BioTelemetry shares near $30 since April. As a small cap stock, you get those volatile dips, especially since shares have run so hard in the past 18 months. My view is that BEAT will continue to innovate and make key acquisitions in digital and connected healthcare.

To hear the CEO talk in the Mad Money interview about their next venture into glucose monitoring, check out their investor relations page at Investors.GoBio.

Disclosure: I own BEAT shares for the Zacks Healthcare Innovators Portfolio.

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