Why the Compumedics Limited share price rocketed 43% higher

The Compumedics Limited (ASX:CMP) share price has had a great day. Here's why its shares are up 43% today…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Much to the delight of its shareholders, the Compumedics Limited (ASX: CMP) share price has gone gangbusters today.

Compumedics is a medical device company involved in the development, manufacture, and commercialisation of diagnostics technology for the sleep, brain and ultrasonic blood-flow monitoring applications.

In early afternoon trade the company's shares are up a whopping 43% to 53 cents.

What happened?

This morning the company announced that it had secured a major magnetoencephalography (MEG) brain imaging contract from the world-renowned Barrow Neurological Institute in the United States.

According to the release, the contracted system is expected to be worth around US$3.75 million (AU$4.9 million), with a discount for special collaborative arrangements.

In the near-term the two parties' collaboration will include U.S. FDA applications and beta-site services such as biomarker test protocols.

In the longer-term the two parties will work together to improve and expand CPT/IDT (government health reimbursement) codes to help enhance brain healthcare.

Should you invest?

I believe Compumedics is an exciting healthcare company with significant growth potential. While its first-half results were a big disappointment, things have started to pick up now.

But although things do appear to be improving, I plan to err on the side of caution with this one and hold off an investment for the time being.

Sales into the U.S. fell sharply in the first-half, causing its share price to collapse to a 52-week low. If sales rebound in the second-half, asides from the new contract, then I may be inclined to take a closer look.

But in the meantime I would suggest investors consider other medical device companies like Nanosonics Ltd. (ASX: NAN) or ResMed Inc. (CHESS) (ASX: RMD).

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »