Osprey Medical Inc. (ASX: OSP)

OSP is a medical device company. It is products, AVERT Plus System and DyeVert System, were used to monitor the amount of X-ray dye used in cardiovascular procedures. Its products minimize the dye-related damage to the kidney function, known as Contrast-Induced Acute Kidney Injury. Its market capitalization as of 27^th October 2021 stood at AUD 25.53 million, and the share price stood at AUD 1.055 per share.

Financial and Operational Updates: As announced on 27^th October 2021, OSP witnessed 34% increase in net revenues in Q3 FY21, reaching $508k, and unit sales stood at 1,773 compared to last year. The company saw traction in sales as a result of distribution agreements with GE Healthcare in Europe and Regional Healthcare Group in ANZ (both regions contributed ~38% of sales). In addition, OSP received a Medical Device License from Health Canada for the DyeVert range of products. Following this, the company inked a 4-year agreement with GE Healthcare Canada for commercialization in the Canadian market. During the quarter, OSP appointed Martin Emerson as Director to the board with over 35 years of experience in the healthcare industry. It had closed the period a cash balance of $11.3 million as of September 2021 (vs. $11.05 million in the preceding quarter). During the quarter, the company received a second loan under US Paycheck Protection Program totalling US$1.1 million.

Technical Analysis: On a weekly chart, OSP stock prices are trading below the horizontal trend line resistance level at AUD 0.109 and facing the resistance support of the same. Moreover, prices are trading below the trend-following indicators 21-period SMA and 50-period SMA, indicating bearish momentum in the stock. The momentum oscillator RSI (14-period) is trading at ~40 level. An important support level for the stock is placed at AUD 0.88, while the key resistance level is placed at AUD 1.09.

Considering the recent rally in stock price with returns of ~+29.45% in the last one month, the ramp-up in sales following commercialization strategy, technical levels, a decline in the cash balance, losses and negative ROE, we recommend investors to “Sell” the stock. The stock was analysed as per the closing price of AUD 1.055 per share as of 27^th October 2021.

Weekly Technical Chart – OSP

Source: REFINITIV

Note: The purple color line in the chart shows RSI(14-period) and the green color lines indicate 50-period SMA and sky-blue color line represents 50-period SMA. 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest. 

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