Shares of medical devices company Beyond Air (XAIR) appreciated significantly last week after a couple of insiders including its CEO purchased shares just two days after the FDA approved the company’s LungFit device to treat respiratory failure in infants. Beyond Air’s LungFit device is capable of delivering precise amounts of Nitric Oxide (NO) to patient’s lungs by capturing the NO from ambient air instead of using NO cylinders. The company is also testing the efficacy of another device to see if delivering high concentrations of NO could help treat solid tumors. The company has very little revenue and mounting losses as you would expect from a developmental stage medical devices company.
Another interesting insider purchase last week was by the new CEO of NextEra Energy (NEE). We wrote the following about NextEra earlier this year,
Four different insiders including both the CEO and CFO of NextEra Energy acquired shares after a rare large drop in the stock that saw it dip below the $70 level. The drop in the stock was a result of Q4 2021 revenue of $5.05 billion coming in well below expectations of $5.79 billion and the sudden departure of its Chairman and CEO Jim Robo.
Mr. Robo has been with NextEra for 20 years and has served as its CEO since July 2012. He has been credited with transforming a sleepy electric utility into the clean energy juggernaut it is perceived as now. The company has been growing its dividend for 26 consecutive years and has an impressive 5 year dividend CAGR of 12%. The current yield is 2% with a 61% payout ratio. The company has been afforded a valuation premium compared to its peers and currently trades at a forward P/E of 27 and a forward EV/EBITDA of 16.49, not exactly the kind of valuation you would expect from a regulated utility in a rising interest rate environment. With $54 billion in net debt on the balance sheet and management changes on the horizon, I would approach NextEra with caution despite insider enthusiasm.
Welcome to edition 627 of Insider Weekends. Insider buying decreased last week with insiders purchasing $20.83 million of stock compared to $35.49 million in the week prior. Selling also decreased to $206.52 million compared to $403.42 million in the week prior.