Outset Medical (OM) Surges 25.6%: Is This an Indication of Further Gains?

Outset Medical, Inc. OM shares soared 25.6% in the last trading session to close at $5.05. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 8.2% loss over the past four weeks.

Outset Medical scored a strong price increase, on investors’ optimism driven by the announcement that it has entered into the Refresh Amendment to the Purchasing Agreement with HCA Management Services, L.P., dated May 1, 2020. As part of the Amendment, HCA has agreed to refresh its existing fleet of Tablo Hemodialysis Systems by purchasing new Tablo Hemodialysis Systems from 2026 through 2028, for an aggregate contract value of approximately $40 million, net of rebates and allowances.

This company is expected to post quarterly loss of $0.63 per share in its upcoming report, which represents a year-over-year change of +25%. Revenues are expected to be $28.8 million, down 8.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Outset Medical, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on OM going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Outset Medical is a member of the Zacks Medical Info Systems industry. One other stock in the same industry, Health Catalyst HCAT, finished the last trading session 1.7% lower at $1.74. HCAT has returned 37.2% over the past month.

Health Catalyst's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.02. Compared to the company's year-ago EPS, this represents a change of -50%. Health Catalyst currently boasts a Zacks Rank of #3 (Hold).

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