Dry Your Tears

Written by GSCR Staff   
Friday, 01 March 2013 08:10

February is in the books and spring is right around the corner.  There are plenty of reasons to be upbeat if you suffer from the winter blahs, the least of which is we are close to record highs on all major indexes.

There is more to TearLab Corporation (NASDAQ – TEAR - $5.92) than a very catchy ticker symbol.  The ophthalmic device company engages in developing and marketing the TearLab Osmolarity System, a proprietary in vitro diagnostic tear testing platform that measures tear film osmolarity for the diagnosis of dry eye disease.  This system allows ocular professionals to test for sensitive and specific biomarkers using nanoliters of tear film at the point-of-care.  Its innovative TearLab Osmolarity System consists of TearLab disposable which is made of a single-use microfluidic microchip.  Then there is the TearLab pen, a hand-held device that interfaces with the TearLab disposable; and TearLab reader, which is a small desktop unit that allows for the docking of the TearLab disposable and the TearLab pen, as well as provides a quantitative reading for the operator.  The company operates in North America, Europe, and Asia.

TearLab is operating in the red as most of the small cap stocks in this space are due to the start up costs and time required for market penetration.  The Company has deployed a nationwide marketing campaign and sales force along with an aggressive pricing strategy.  Once TEAR completes this initial phase it should be poised to generate positive income due to the high barriers of entry in this business and related maintenance and service contracts. 

The stock hit a 52-week high yesterday mid-session of $6.04 before closing at $5.92.  The chart indicates a solid momentum play with a climb from a depth of $3.00 last June and a very bullish signal related to the short term EMA.  The stock averages over 150,000 trades per day with a few high volume sessions approaching half a million shares trades since the start of 2013.  There seems to be some gradual accumulation here.

TEAR is slated to release financials on March 20.  If then news illustrates continued progress, we see the stock possibly reaching $7 in 2Q13 as sales could grow by 300% or more in 2013. 

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours. 

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