Shockwave Medical is approaching a buy point of 223.25 off a cup base with a rising relative strength line as it trades well above its 50-day moving average and 200-day moving average. Shockwave stock is an IBD 50 Stocks to Watch pick before earnings next week.
This medical device maker was forming a cup-with-handle pattern earlier this year with a buy point of 223.25. But the formation was deep and came undone. Since then, it has made a comeback on the strength of its Q1 earnings, which beat FactSet analysts' consensus on both earnings and sales. Shockwave posted a profit of 39 cents a share vs. a loss of 68 cents in the year-ago quarter.
A rally in health care stocks over the past six weeks as investors feared a recession has also buoyed the stock. However, the S&P Health Care Select ETF has underperformed the S&P 500 over the past week on signs that a recession may be mild.
Shockwave Stock Q2 Earnings Due Next Week
Still, that prospect could affect SWAV stock, and with second-quarter earnings due out next week, investors may want to be careful about buying the stock right now.
Analysts estimate Shockwave earned 44 cents a share on sales of $107.5 million in the second quarter, swinging from a loss of 1 cent a year earlier. The company is scheduled to announce earnings on Aug. 8.
Shockwave is No. 3 in IBD's 75-stock medical systems and equipment group. Listed by Relative Strength Rating, it ranks behind radiation device maker Sensus Healthcare and blood collection-and-processing systems developer Haemonetics, according to IBD Stock Checkup. The group is ranked a strong No. 32 among 197 industry groups.
Shockwave makes products designed to transform the way calcified cardiovascular diseases are treated. Shockwave's technology is intended to increase blood flow by using sound waves to fracture and weaken layers of calcification in arteries.
SWAV has an IBD Composite Rating of 95 but a low 77 EPS Rating, which tracks quarterly and annual earnings-per-share growth. The company first turned a per-share profit last year.
Its RS Rating, however, has climbed steadily since early May to 97 currently.
Follow Michael Molinski on Twitter @IMmolinski
