Insider buying can provide clues about a stock’s next move. Insiders sell company stock for a number of reasons. Yet they only buy stock for one reason – they expect it to rise.
Here, we are going to highlight an interesting insider purchase at Establishment Labs Holdings Inc (ESTA:US). Establishment Labs Holdings is a global medical technology company. The company’s main focus is on the design, manufacturing and marketing of silicone breast implants. It’s traded on the Nasdaq Stock Exchange and currently has a market capitalization of $1.5 billion.
Establishment Labs Holdings Inc: Insider Buying
2iQ’s data shows that between November 17 and November 24, a director at Establishment Labs Holdings, Edward Schutter, purchased a total of 65,027 ESTA shares at an average price of $69.21 per share. This cost the insider around $4.5 million and increased his holding by about 28%.
Significant Insider Purchases
This trade is worth highlighting for a couple of reasons.
Firstly, Mr. Schutter’s insider trades are very large in monetary terms when aggregated and he has increased the size of his holding by a significant percentage. This suggests he is confident the stock is set to move higher. It’s worth noting that these trades from Mr. Schutter’s represent the largest amount of insider buying at Establishment Labs within a quarter for several years.
Secondly, Mr. Schutter has extensive experience within the pharmaceutical sector. He has been in the industry for over thirty years, and he is currently the CEO of Arbor Pharmaceuticals which means he knows how a company works looking at it from the very top. As well as holding several high-level management roles previously, he was also President of Sciele Pharmaceuticals and VP of Global Business Development at Solvay Pharmaceuticals.
Strong Financial Results
Establishment Labs Holdings recently posted a strong set of third-quarter results as a result of continued momentum throughout all of its businesses.
For the quarter, revenues were $29 million, an increase of 27.6% on the prior year. Meanwhile, gross profit came in at $19.6 million versus $15.1 million the year before. Cash levels remained healthy at $64.6 million. Importantly, the company’s regulatory and commercial timelines to sell Motiva implants into China and the US remained on track.
On the back of these strong results, the company raised its full-year revenue guidance to $124-$128 million, from $122-126 million.
“Our strong financial results are being matched by the significant progress we are making across a number of programs and initiatives. We launched our Motiva Flora tissue expander at the London Breast Meeting during the third quarter. This is an important step in our Aesthetic BreastRecon® program, where we are working to expand awareness and access of post-mastectomy reconstruction while offering the tools and techniques that allow women to receive reconstructive surgeries that achieve the aesthetic ideals to which they aspire," said Juan José Chacón-Quirós, Chief Executive Officer.
In light of these results, we see the recent insider buying at Establishment Labs Holdings as bullish. The strong results and exciting pipeline lead us to believe that Mr. Schutter is very confident in the future for the company and that he firmly believes that the share price will move higher despite a strong run in 2021 so far.