EnteroMedics (ETRM) Is Down: Why Bulls Don’t Mind

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EnteroMedics Inc (NASDAQ: ETRM)

EnteroMedics is having a rough time in the market today. However, if you’re a bull, chances are that you’re not too concerned about today’s declines after watching yesterday’s gains. Today, we’ll talk about why ETRM was up yesterday, why the stock is declining today, and what we can expect to see moving forward. So, let’s get right to it…

EnteroMedics Saw Nice Gains Yesterday

Yesterday proved to be a great day for EnteroMedics after a well known analyst at Canaccord by the name of William Plovanic released his views of the company stating that he is happy with the commercialization of vBlock. Here’s a snippet of what he had to say…

We are encouraged by the initial commercialization progress with 51 centers certified and 77 surgeons trained on the procedure. These metrics are tracking ahead of management guidance and other expectations which called for 30 certified sites by YE2015 previously. Additionally, EnteroMedics provided color regarding its DTC campaigns and educational webinars to drive patients to vBlock Therapy. Lastly, EnteroMedics has expanded access to the procedure through financing options and reimbursement support.”

In the note, Plovanic maintained Canaccord’s rating of ETRM as a “Buy”, placing a price target on the stock of $2.50. As a result, ETRM climbed dramatically in the market yesterday, gaining more than 20%.

What We’re Seeing From ETRM Today

Unfortunately, the movement we’re seeing in the stock today isn’t as positive as what we saw yesterday. As a matter of fact, today is bringing declines. Currently (12:46), EnteroMedics is trading at $0.23 after a loss of 7.77% so far. Nonetheless, the bulls don’t seem to be concerned, and they shouldn’t be. The reality is that price movements in the market tend to happen through a series of overreactions. Therefore, yesterday’s gains were a bit of an overreaction and are being corrected today before the stock can continue to move up at a more realistic pace.

What To Expect Moving Forward

Moving forward, I’m expecting to see positive moves from ETRM. As I mentioned above, today’s declines are nothing more than normal market movement as the market works to correct exorbitant gains. However, tomorrow, we should see more upward movement. The bottom line is that vBlock’s commercialization is going incredibly well, which is likely to lead to strong sales moving forward and earnings for investors. Ultimately, there’s simply not much to be concerned about here.

What Do You Think?

Where do you think ETRM is headed and why? Let us know in the comments below!

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