What Happened?

A number of stocks jumped in the afternoon session after positive inflation data fueled hopes for an interest rate cut by the Federal Reserve. 

The latest Consumer Price Index (CPI) report showed inflation rose by a modest 0.2% in July and 2.7% over the last year. This cooler-than-expected data prompted a significant market rally, with the S&P 500, Dow, and Nasdaq all climbing as investors grew more optimistic. The prevailing view is that easing inflation gives the central bank room to lower interest rates. Lower rates typically reduce borrowing costs for businesses and make stocks more attractive relative to bonds, contributing to widespread gains across sectors like healthcare.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Medical Devices & Supplies - Specialty company Inspire Medical Systems (NYSE: INSP) jumped 3%. Is now the time to buy Inspire Medical Systems? Access our full analysis report here, it’s free.
• Drug Development Inputs & Services company UFP Technologies (NASDAQ: UFPT) jumped 3.5%. Is now the time to buy UFP Technologies? Access our full analysis report here, it’s free.
• Medical Devices & Supplies - Specialty company Globus Medical (NYSE: GMED) jumped 3%. Is now the time to buy Globus Medical? Access our full analysis report here, it’s free.
• Medical Devices & Supplies - Diversified company Neogen (NASDAQ: NEOG) jumped 3.4%. Is now the time to buy Neogen? Access our full analysis report here, it’s free.
• Dental Equipment & Technology company Dentsply Sirona (NASDAQ: XRAY) jumped 3.1%. Is now the time to buy Dentsply Sirona? Access our full analysis report here, it’s free.

Zooming In On UFP Technologies (UFPT)

UFP Technologies’s shares are very volatile and have had 24 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 11.9% on the news that the company posted record second-quarter results and beat analyst profit expectations. The medical products company reported a 37.2% surge in sales to $151.2 million compared to the same period last year. Its adjusted earnings per share reached $2.50, which surpassed Wall Street's consensus estimate of $2.25. This strong performance was primarily driven by a 46% jump in its MedTech business, fueled by demand in areas like robotic-assisted surgery. However, the results included a 20% decline in its Advanced Components division, and the company noted increased labor costs pressured margins.

UFP Technologies is down 10.2% since the beginning of the year, and at $221.03 per share, it is trading 38.3% below its 52-week high of $358.42 from September 2024. Investors who bought $1,000 worth of UFP Technologies’s shares 5 years ago would now be looking at an investment worth $5,057.

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