Penumbra Incorporated (PEN) - Buy Recommendation - $42.25

The 25-day quiet period on Penumbra Incorporated will come to an end on October 13, 2015, allowing the firm's IPO underwriters to publish analyses on the firm that makes medical devices to address neuro and peripheral vascular conditions and other vascular conditions on October 14th.

PEN's share prices will likely see a temporary rise in response to the release of the underwriter reports, opening another buying opportunity for  this growing firm.

We previewed PEN's quiet period expiration event, as well as its IPO, on our IPO Insights platform.

Early Market Performance: Steady Climb Post-IPO

PEN's IPO was priced above its expected price range of $25 to $28 per share, at $30 per unit. The stock closed at $41.30 on its first day of trading for a gain of 37%. PEN has risen steadily, and currently it trades at $41.11 (market close 10.7.2015).

(click to enlarge)

(Nasdaq.com)

Business Overview: Maker of Medical Devices to Treat Vascular Conditions

See our IPO preview of PEN here.

Penumbra is a maker of medical devices designed to address certain vascular conditions, which include ischemic and hemorrhagic stroke that block or rupture blood vessels in the brain. These devices are marketed in the United States, Europe, Canada, Australia and internationally. Its neurovascular access devices are branded under the names Neuron, Neuron MAX, Select, BENCHMARK, DDC, PXSLIM, and Velocity. Its aspiration-based devices and systems are branded under the name 3D, and these products assist with thrombectomy procedures.

Other products include a stent retriever, embolization coiling sytems under than names Penumbra Coil 400 and Penumbra SMART Coil. Other branded devices are marketed under the names LIBERTY Stent, Apollo System, RUBY Coil, Indigo System, and POD.

The company is using the proceeds of the IPO for capitalization, financial flexibility, further research and development, clinical trials and expansion of its sales force.

Executive Leadership Highlights: Backgrounds at Boston Scientific

President, CEO, Chairman and Co-founder Adam Elsesser previously served as President of Boston Scientific SMART and President and CEO of Smart Therapeutics. Mr. Elsesser previously practiced law as a partner at the law firm Shartsis, Friese and Ginsburg, LLP and received a B.A. from Stanford University and a J.D. from Hastings College of the Law.

Penumbra's North American President Daniel Davis has served the company in this role since 2015. He joined the company in 2007. He has over 13 years of experience in the medical device and software industries, previously serving at Boston Scientific. Mr. Davis received a B.A. from Duke University.

Competitors: Boston Scientific, Johnson & Johnson and Medtronic

Penumbra competes directly with several enterprise-level biotechnology and pharmaceutical manufacturers that design and make peripheral vascular and neurovascular medical devices such as Medtronic (MDT), Johnson & Johnson (JNJ), Terumo, Stryker (SYK), and Boston Scientific (BSX).

Conclusion: Buying Opportunity

Investors who wish to buy into Penumbra may wish to take advantage of the strong buying opportunity presented by the upcoming quiet period expiration. Penumbra's IPO underwriters will seek to capitalize on the stock's recent growth through the release of positive reports beginning with the conclusion of the quiet period.

Research shows above-market returns of close to 3% in the (-5, +2) days surrounding a firm's quiet period expiration.

Given that PEN already sits solidly above its IPO price-good news could be an additional catalyst upward for this growing firm.