Cyberonics: 7 Different Insiders Have Sold Shares During The Last 30 Days

Dec. 2.13 | About: Cyberonics, Inc. (CYBX)

In this article, I will feature one medical device company that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Cyberonics (NASDAQ:CYBX) engages in the design, development, marketing, and sale of implantable medical devices to hospitals and ambulatory surgery centers.

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Insider selling during the last 30 days

Here is a table of Cyberonics' insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
David Wise SVP Nov 1-26 22,788 No 85,055 shares + 54,400 options 14.0%
Mark Verratti VP Nov 25-26 19,852 No 52,719 shares + 70,732 options 13.9%
Gregory Browne CFO Nov 18-26 8,216 No 80,942 shares + 64,516 options 5.3%
Sherrie Perkins VP Nov 25 4,000 No

24,161 shares + 24,042 options

7.7%
Darren Alch VP Nov 25 1,250 No 18,874 shares + 24,791 options 2.8%
Daniel Moore CEO Nov 5-15 11,750 Yes 276,252 shares + 207,675 options 2.4%
Randal Simpson VP Nov 1 5,000 Yes 48,285 shares + 72,887 options 4.0%
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There have been 72,856 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Cyberonics' insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
November 2013 72,856 0
October 2013 25,250 0
September 2013 17,537 0
August 2013 47,186 0
July 2013 24,915 0
June 2013 67,901 0
May 2013 15,000 0
April 2013 10,000 0
March 2013 23,250 0
February 2013 12,394 0
January 2013 12,000 0
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There have been 328,289 shares sold and there have been zero shares purchased by insiders this year. The month of November has seen the most insider selling.

Financials

Cyberonics reported the fiscal 2014 second-quarter, which ended October 25, financial results on November 21 with the following highlights:

Revenue $70.1 million
Net income $13.9 million
Cash $122.7 million
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(Source: Earnings presentation)

Outlook

Cyberonics' guidance for the fiscal year 2014 is as follows:

Net sales $281-$285 million
Adjusted net income $54-$56 million
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(Source: Earnings presentation)

Upcoming milestones

Cyberonics anticipates that AspireSR sales in Europe may commence toward the end of this fiscal year in a phased launch.

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(Source: Earnings presentation)

Competition

Cyberonics' competitors include Medtronic (NYSE:MDT), and St. Jude Medical (NYSE:STJ). Here is a table comparing these companies.

Company CYBX STJ MDT
Market Cap: 1.87B 17.05B 57.26B
Employees: 581 15,000 46,659
Qtrly Rev Growth (yoy): 0.11 0.01 0.02
Revenue: 270.02M 5.45B 16.76B
Gross Margin: 0.91 0.73 0.75
EBITDA: 88.87M 1.72B 5.69B
Operating Margin: 0.31 0.26 0.29
Net Income: 47.28M 720.00M 3.81B
EPS: 1.70 2.45 3.74
P/E: 40.42 14.68 15.32
PEG (5 yr expected): 1.98 1.69 2.28
P/S: 6.98 3.16 3.42
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Cyberonics has the highest P/S ratio among these three companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
STJ 0 2,044,216
MDT 4,800 297,118
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Only Cyberonics has seen intensive insider selling during the last 30 days.

Conclusion

There have been seven different insiders selling Cyberonics and there have not been any insiders buying Cyberonics during the last 30 days. Two of these seven insiders decreased their holdings by more than 10%. Cyberonics has an insider ownership of 2.80%.

Cyberonics is trading at a P/E ratio of 40.42 and a forward P/E ratio of 29.93. The company has a book value of $8.65 per share.

Before entering short Cyberonics, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are relatively high P/S ratio, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.