It is interesting to note that, of all the laser providers, LVCI took the largest hit last week. Even though, of course, LVCI was not involved in the dispute that lead to the price competition (the dispute was between LZRC and LCAV). Even though, of course, LVCI operates in small markets where it faces little, if any, competition (LVCI only overlaps LZRC in four markets and LCAV in four markets). Even though, of course, LVCI does not set the price for procedures (the company charges its price to the surgeon who then sets the price for the patient). Even though, of course, the CEOs of LVCI and VISX have both stated that there is no price competition going on at this time. Even though, of course, there were repeated "Strong Buy" recommendations by the analysts of LVCI.
I can theorize of only two reasons for the drop. First, stupid irrational panic by individual and institutional investors alike. Second, a marketplace that is driven exclusively by momentum. Fundamentals and relative valuation are irrelevant to this market. Speculators buy and sell based on whether a stock is rising or falling. There is no rational thought involved in the process. There will be no "buying on the dips" as such requires a rational evaluation of the situation. |
