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).
