Multiple Insiders Have Bought Valeant and These Healthcare Stocks

Multiple insiders have bought shares of Cyberonics, Inc. (NASDAQ:CYBX), a $1.2 billion market cap medical device company. Its primary product, the VNS Therapy System, is used for nerve stimulation. Cyberonics reported double-digit growth rates in revenue and earnings in its most recent fiscal quarter (which ended in October) compared to the same period in the previous fiscal year, including a 50% rise on the bottom line. The stock trades at 30 times trailing earnings, so some degree of future growth is already priced in at the current valuation. Renaissance Technologies, whose founder Jim Simons is now a billionaire, increased its stake in Cyberonics during the third quarter of 2012 and closed September with 1.6 million shares in its portfolio (check out Renaissance’s stock picks). Palo Alto Investors is another major shareholder in the company.

Several company officers at Haemonetics Corporation (NYSE:HAE), a medical device company whose products are used to help manage the blood donation process, bought small quantities of shares since the beginning of November. At a market capitalization of $2.3 billion, the stock is valued at 43 times its trailing earnings, a figure that we would normally consider high. While the company has been experiencing revenue growth, in the second quarter of its fiscal year (the quarter ended in September), earnings were down sharply. As a result we think that we would avoid the stock; even with sell-side analysts expecting a strong recovery over the next several quarters, the forward P/E (for the fiscal year ending in March 2014) is still high at 22.

Disclosure: I own no shares of any stocks mentioned in this article.