Titan Medical Inc. (NASDAQ: TMDI) is rocketing in the market this morning, squeezing the shorts out of their positions as an analyst initiation takes center stage. Here’s what’s going on:
Titan Medical Gains Analyst Coverage
In a note to investors, Oppenheimer announced that it has initiated coverage on Titan Medical, and it’s done so in an overwhelmingly positive way.
Suraj Kalia, an analyst at Oppenheimer initiated coverage of Titan Medical, rating the stock an “Outperform”. Along with the strong rating on the stock, the analyst suggested the potential for compelling growth with a $4 price target.
In the note, Kalia said Titan Medical is an emerging player in the robotic surgery space, a space that is expected to continue growing and driving significant revenues for those involved. In particular, Kalia is impressed with the company’s Enos system, which is one of only two single-port robotic surgery platforms in the space today. The other is Intuitive Surgical’s da Vinci SP.
Kalia also said that the strategic partnership between Titan Medical and Medtronic is one that adds icing to the cake that is the investment thesis surrounding the stock. As part of that deal, Titan Medical will develop key prototypes for Medtronic’s robotic surgery program.
Why Investors Care
This is obviously big news as it sent the stock for gains of more than 30% early in the premarket, but why is it that investors care so much?
The fact of the matter is that Oppenheimer is home of some of the most well respected analysts on Wall Street. These experts live, eat, and breathe the stock market and their views as to where stocks are going to go are held in high regard.
Moreover, this is an interesting initiation as it opens the door for a potential short squeeze.
You see, Titan Medical is a relatively heavily shorted stock, with short interest in the stock sitting at around 15%. With the positive news, what we may be seeing is the beginning of a short squeeze.
These events take place when heavily shorted stocks begin to move up. As this happens, those who hold short positions in the stock quickly lose money, leading them to buy shares to cover their positions and ultimately resulting in increased volume along with substantial price appreciation.
So, what we’re looking at this morning isn’t just an analyst initiation, it’s a potential short squeeze.
The Bottom Line
The bottom line here is simple. Titan Medical is a stock that’s well worth your attention. As the company continues to innovate in the robotic surgery space, the opportunity is only likely to continue growing. Now, with Oppenheimer rating the stock a Buy and a heavy short load on the stock, the potential for a short squeeze, followed by long-term compelling price appreciation, is exciting.