Will Teleflex Stock Rise After A 7% Fall Last Week?

BRAZIL – 2020/06/22: In this photo illustration the Teleflex Incorporated logo seen displayed on a … [+] smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images

The stock price of Teleflex, (NYSE: TFX) best known for its single-use medical devices for common diagnostic and therapeutic procedures, reached an all-time high of $440 in April this year before a recent sell-off, after the Centers for Medicare and Medicaid Services proposed new rules, including one that will result in a 20% cut in physician payments for UroLift – Teleflex’s system to treat enlarged prostate. While this new rule apply to procedures performed only in doctors’ offices, it will impact nearly one-third of UroLift’s total sales. [1] UroLift falls under the Interventional Urology segment reported in the company’s annual filings, and the segment accounted for 11% of Teleflex’s total sales in 2020.

After a 7% fall in a week, will TFX stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for TFX stock average 6.5% in the next one-month (twenty-one trading days) period after experiencing a 7.2% drop over the previous week (five trading days).

But how would these numbers change if you are interested in holding TFX stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Teleflex stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF TFX stock moved by -5% over five trading days, THEN over the next twenty-one trading days TFX stock moves an average of 4.5%, with a good 75% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of Teleflex Stock Movements:

Question 1: Is the average return for Teleflex stock higher after a drop?

Answer: Consider two situations,

Case 1: Teleflex stock drops by -5% or more in a week

Case 2: Teleflex stock rises by 5% or more in a week

Is the average return for Teleflex stock higher over the subsequent month after Case 1 or Case 2?

TFX stock fares better after Case 1, with an average return of 4.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.5% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Teleflex stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Teleflex stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For TFX stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Average Return
Trefis

You can try the engine to see what this table looks like for Teleflex after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although TFX stock appears to be an exception to this general observation.

It’s pretty powerful to test the trend for yourself for Teleflex stock by changing the inputs in the charts above.

While TFX stock may rebound, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Teleflex vs. Emergent Biosolutions.

See all Trefis Featured Analyses and Download Trefis Data here

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