Why TearLab Corp. Shares Dipped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of TearLab , an ophthalmic (i.e., eye-related) medical device company focused on helping diagnose dry eye disease, dipped as much as 11% after the company reported its third-quarter earnings results.

So what: For the quarter, TearLab reported a whopping 247% increase in revenue to $4.2 million as it received a total of 467 orders for its proprietary TearLab Osmolarity systems for diagnosing dry eye disease. Net loss also shrank modestly to just $4.2 million, or $0.13 per share, from $4.6 million, or $0.17 per share a year ago. Both results were right in line with Wall Street's expectations.

Now what: You might be wondering, "If TearLab's results met expectations, why is it getting pounded today?" I believe the answer lies in witnessing the incredible growth of ophthalmic therapies like Regeneron Pharmaceuticals' Eylea. Investors have observed this and a number of smaller drugs to treat eye diseases prosper over the past year and have been expecting an almost unrealistic ramp-up out of TearLab. Admittedly, I would much rather wait for TearLab to get closer to profitability before even considering jumping on board, but today's move lower appears to be more a fault of investors' frothy hopes and emotions than anything TearLab had to report.

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The article Why TearLab Corp. Shares Dipped originally appeared on Fool.com.

Fool contributor  Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle  @TMFUltraLong . Try any of our Foolish newsletter services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights  makes us better investors. The Motley Fool has a disclosure policy .

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