Sell Remaining Quarter of TransMedics Group (TMDX)
We went into the TransMedics (TMDX) Q3 earnings report yesterday afternoon with a quarter of our original position and lingering questions about the underlying trends in the business. The company reported results well short of expectations.
What the disappointing Q3 results and conference call Q&A showed, yet again, is that organ transplant is an insanely complex market with a lot of variables. Add in a logistics business (TransMedics Aviation) and it gets even more so. Many analysts on the call were struggling to understand the various moving parts.
The bottom line is that, while there are many valid reasons why TransMedics missed expectations by a relatively wide margin in Q3, ranging from a nationwide dip in transplant volumes to planes that were down for service, the stock is likely going to be in the penalty box for a while.
In order for TMDX to get back into rally mode we’ll need, for starters, solid evidence that concerns over competitive threats (which management said are way overblown) are fading, that transplant volumes are picking up again, and that management has a tighter handle on how to handle the aviation business.
I think it’ll be a while before we have enough clarity to want to own TMDX.
With plenty of other opportunities out there, and just a quarter of our position left, let’s book the gain (which is still over 150%) and move on. We can come back later, if we want. SELL LAST QUARTER
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