Medical devices company Axonics is an IBD 50 medical stock to watch as it displays strength in a weakening economic environment. The maker of solutions for people with overactive bladders and bowel control issues has formed a new basing pattern and is nearing a buy point.
This health provider came public in 2018, offering treatments that include Axonics R15 and F15, which produce neurostimulation to help people regain bladder and bowel control. It also markets Bulkamid, a bulking agent used to manage female stress urinary incontinence.
The Irvine, Calif.-based company has yet to report a profit, but sales have grown double-digit percentages since the start of the pandemic. Revenue rose 50% in the second quarter of 2022 and has grown an average 28.3% in each of the past three years, according to Stock Checkup.
Analysts tracked by FactSet are looking for the company to book $254.2 million in 2022 sales, up 41% from last year.
Medical Device Stock Still Not Profitable
The company posted a Q2 loss of 47 cents per share but the red ink was 15% above expectations. In addition, earnings estimate revisions are rising, a bullish indicator.
AXNX stock has formed a three-weeks-tight pattern with a 74.07 buy point, according to MarketSmith.
Narrow range price action began about three weeks ago and has continued into September. Each weekly close has been within 2% of the prior week and sideways trading has continued into this week's market.
The high point of this pattern is 74.17, setting the buy point 10 cents higher at 74.27.
Uncertain Outlook
Technically-speaking, the stock has arrived at an interesting juncture.
The three-weeks-tight pattern can offer a good buying opportunity but the stock has already risen 20% from the buy point of a prior base. It's often prudent to take profits after a stock climbs 20% from a base because its price becomes overextended and can easily enter a correction.
With the market under pressure, the stock could get sold due to macro headwinds.
However, so far at least, the tight trading pattern indicates investors are reluctant to sell, suggesting durable support despite the run-up.
The upward-trending relative strength line also bodes well for Axonics' future, making new highs along with its stock price.
The Relative Strength Rating has now reached a lofty 96 out of the highest-possible 99.
Looking at other positives, the medical device stock is trading comfortably above its 50- and 200-day moving averages while also finding support at its 21-day exponential moving average.
In addition, Axonics has membership in the strong Medical Systems and Equipment group, which ranks No. 14 out of IBD's 197 industry groups. This sector is showing accelerated leadership, lifting to 9th place three weeks ago from 22nd six weeks ago.
