BioTelemetry (BEAT) came public as CardioNet in 2008; the company provides remote cardiac monitoring for medical diagnostics and clinical trials and is pushing into other outpatient monitoring markets.

It launched a blood glucose monitoring system in 2018 and acquired Centene’s remote patient monitoring subsidiary earlier this year. It also owns Geneva Health Solutions, a software product that helps physicians keep track of their patients remotely.

Following the $250 million acquisition of Swiss competitor LifeWatch in 2017, BioTelemetry is the clear leader in the cardiac market. Physicians prescribe heart monitors to track cardiac arrhythmias. In clinical trials, the company demonstrated superiority of its devices compared to older technologies in diagnosing atrial fibrillation.

The company’s newest Mobile Cardiac Telemetry patch is a wireless heart monitor which communicates with a receiving device by Bluetooth radio. The patch was approved in 2016 and launched at the end of 2017. Drug and device companies also partner with BioTelemetry to screen for cardiac events during clinical trials. This market provided 12% of 2019 revenue.

Wireless monitoring is a hot growth field. As the industry leader, BioTelemetry relies on increased adoption more than competitive wins. It can also drive adoption by making its devices better and easier to utilize. We project low-double digit growth going forward. COVID-19 lockdowns caused volumes to fall throughout the entire medical system, leading to fewer cardiac diagnosis and reduced revenue for BioTelemetry.

Volumes are returning, but analysts expect 2020 sales growth to be flat or slightly down, with a robust bounce back in 2021. To reduce the earnings noise from acquisition accounting and, to a lesser extent, COVID-related business disruptions, we are utilizing analyst consensus “normalized” EPS estimates.

We model 16% compound EPS growth, with a P/E range of $20 to $35. Our forecast low price is 16.4, the product of $0.82 per share in trailing GAAP EPS and the low P/E of 20. Our forecast high price is $144. The upside/downside ratio is 4.2 to 1.