Why Transmedics Group Stock Plummeted 21% This Week

Shares of Transmedics Group (NASDAQ: TMDX) sank over 20% this week, according to data from S&P Global Market Intelligence. The organ transplant disrupter announced a CFO transition and reduced the range for its full-year 2024 guidance, indicating slowing revenue growth. As of 1:54 p.m. ET on Friday, Dec. 6, Transmedics stock is down 60% from all-time highs set just earlier this summer.

Here's why Transmedics Group stock has been falling once again.

CFO transition, guidance reduction

On Dec. 2, Transmedics announced that its CFO, Stephen Gordon, would be retiring and that Gerardo Hernandez would take over the position. Investors typically do not like it when CFOs leave, which could be why Transmedics stock is falling this week. However, Hernandez looks like an experienced person for the role, with 25 years in the healthcare and consumer packaged goods sectors.

The more concerning development was Transmedics' updated guidance for 2024. The company now expects revenue of $428 million to $432 million in 2024, which narrows and lowers its prior guidance of $425 million to $445 million. While this new guidance equates to over 75% revenue growth for the full fiscal year, the company has been going through a big revenue slowdown in recent quarters. If the company hits the low end of its guidance -- $428 million -- Q4 revenue will be $108 million. This is exactly what Transmedics generated in the third quarter and is actually lower than the $114 million it generated in the second quarter of 2024.

As a growth stock, investors are expecting fast revenue growth out of Transmedics. With this rapid revenue growth slowdown, it is no surprise to see the stock faltering yet again this week.

Should you buy Transmedics stock?

Temporary slowdowns can sometimes provide buying opportunities for investors focused on the long term. Is that the case with Transmedics Group? The company's market cap has now fallen to $2.3 billion, which almost makes it a small-cap stock once again. The organ transplant market is growing, and Transmedics clearly has found a market fit for its end-to-end solution that safely transports organs for surgery around the country.

The stock is not dirt cheap based on this revenue guidance, but the company is starting to flip to profitability, having generated $31 million in operating income over the past 12 months. If you believe in the Transmedics Group growth story, now could be a good time to scoop up some shares of this former growth darling.

Should you invest $1,000 in TransMedics Group right now?

Before you buy stock in TransMedics Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and TransMedics Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $889,004!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of December 2, 2024

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends TransMedics Group. The Motley Fool has a disclosure policy.