Dec 10 Speculative Stock Selection

Stock to Watch on Tuesday December 11, 2007

Mindray Medical International LTD (MR:NYSE) - Mindray Medical International (MR) is a Chinese manufacturer of medical devices, with products in patient monitoring, diagnostic lab equipment, and ultrasound imaging. MR recently (June 2007) received FDA approval for Hypervisor VI, a central monitoring system, and for its differential hematology analyzer. In addition, they have several more products in the pipeline for next year.

Bear Sterns initiated coverage on the Mindray Medical today with an Outperform rating.

There are few analysts covering the stock - only four - which allows for more upside potential with additional coverage and buy recommendations. The last three quarters MR has beaten estimates by $0.03, $0.03, and $0.01 per share. Earnings in the recent quarter came in at $0.18 per share, with mean estimates for Q4 of $0.20 per share. The three-year earnings have been increasing at 59% per annum, and the stock currently sports a PE of 70 with todays 7.7% price gain. MR carries a high gross profit margin on its products - 55% - beating most of its competitors. Last quarter revenues were up 67%. The stock is not cheap, but is growing rapidly and should increase its visibility and coverage.

The stock is on my watchlist because it has just rebounded from a pullback that has now accelerated the stock price back up to just below its 52-week high (45.19). Technical traders will be looking at the stock on Tuesday to see if MR can break into new ground signalling a strong technical buy signal.



MR is a speculative play - it's in China, it's followed by few analysts, and trades at a high P/E. But the stock has big upside potential, and could be an interesting play for the coming three months.