July 28, 2016 | 10:50 AM by Fahad Khalid | fkhalid@jaguaranalytics.com

Unlock: Penumbra (PEN) Up +12% Since Our Bullish Call on Monday

It pays to do fundamental research. This alert was sent to clients four days ago on July 25. Stock +12% since. To learn more about our approach and how you can become a successful trader, sign up for 2 week trial and test drive live chat room with some of the best traders: SUBSCRIBE

July 25, 2016

Penumbra (PEN) – Keep an eye on this stock Jags!

PEN is expected to announce this Wednesday in Boston data from 3D stent retriever. The trial was halted early few weeks ago and management in press release told investors it had nothing to do with safety. Since its aspiration system is already selling very well (raised FY2016 revenue guidance in May to $232M vs. $222M estimate, up +26.5% YoY), it is reasonable to assume that trial wasn’t halted due to efficacy reasons. The only reasonable conclusion to derive here is the trial was halted because it met the objective. The data on Wednesday should be good and stock should respond positively.

But how does that stack against consensus view? See the highlighted yellow lines in snapshot below:

So, how to trade given stupid wide bid/ask spread? The simple easy trade here is to get long stock at $61 and buy August 60 puts for $2.50 or less a hedge. Full protected below $60. You are risking less than 6% of underlying with maximum upshot if this rips higher on Wednesday.

PEN Note PEN Chart

#PEN
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