Why Medical Developments International Ltd shares have been crushed today

One of the worst performers on the local market on Monday has been the Medical Developments International Ltd (ASX: MVP) share price.

At the time of writing the healthcare company’s shares are down over 17% to $5.92.

What happened?

This morning Medical Developments International released an update to the market warning that sales revenue would be lower than the market expects in FY 2018.

Due to lower device sales in Australia and lower than expected growth rates for devices in the United States and Europe, management expects gross revenue in FY 2018 to be flat or down slightly year on year.

Furthermore, underlying profit is forecast to come in at just $0.3 million due largely to increased investment in infrastructure ahead of the anticipated roll out of its Penthrox product across Europe, Mexico, Canada and the Middle East.

What now?

Management has advised that sales of Penthrox, also known as the green whistle, are expected to increase in FY 2019 when the company starts to benefit from its global expansion.

This could make it worth considering a small purchase of shares on the dip, but only if you’re willing to be patient and have a high risk tolerance. I think the company has a lot of potential, but it really will depend on the success of its international expansion.

If that is a success then I’m sure it will more than live up to its premium valuation, but if it fails then I fear its share price could collapse. Because of this, I intend to sit on the sidelines and wait for signs of improvement before investing.

In the meantime, up and coming healthcare shares such as Volpara Health Technologies Ltd (ASX: VHT) and Zenitas Healthcare Ltd (ASX: ZNT) could be better options for investors.

The shares of Volpara Health Technologies may also trade on a premium valuation like Medical Developments International, but it is delivering sales growth that I believe justifies this premium.

Alternatively, these hot stocks could be even better investments.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended Zenitas Healthcare Ltd. 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 Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!