Investors woke up to the potential of sleep treatment business Somnomed Limited (ASX: SOM) today after it announced a record-breaking number of sleep apnea devices sold in the month of September.
Shares shot up more than 8% to $2.33 and are up 55% over the last six months. Somnomed is competing in the same field as larger rivals ResMed Inc. (CHESS) (ASX: RMD) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) but has one potential competitive advantage. Its sleep treatment devices are easily used sports mouth-guard type fittings, whereas the offerings of its rivals are mainly larger and more cumbersome machine-like devices.
In the treatment of sleep apnea patient compliance is a salient issue and the relative ease of use of Somnomed's devices may be driving global sales to record levels. That and a big marketing push across Somnomed's network of associated dentists around the world particularly the U.S. and Europe.
As the sales ramp up Somnomed intends to double its manufacturing capacity by the end of the year.
It's no secret Somnomed has a potentially big future and with it comes a big valuation, the broker Commsec records that it earned 0.9 cents per share in 2014, which puts it on a trailing price earnings ratio around 259 when selling for $2.33.
The company has confirmed strong growth expectations for the year ahead and is one to keep an eye on.
