Senior Analyst Scott Baily at Bluestone Capital reiterates his STRONG BUY
recommendation on Candela Corporation (NASDAQ: CLZR $14 1/2) following its
secondary stock offering, with a 12-18 month price target of $20-$25. Analyst's
Summary Since the recent closing of CLZR's secondary common stock offering of
2.43 million shares, the company raised approximately $20 million in proceeds, net
of expenses. Total common stock outstanding after the secondary is 8.1 million
shares. Because the offering was completed after the closing of FY99 (June), or
FY99 EPS estimate remains unchanged at $1.05, up from an operating EPS loss of
$0.33 per share in FY98. However, following CLZR's dilution from an offering of
2.4 million shares, our new FY00 EPS estimate is $1.10, revised down from our
previous EPS estimate of $1.30. We are also initiating FY01 and FY02 EPS
estimates of $1.35 and $1.60, respectively. With CLZR's stock currently selling for
12.7 and 10.4 times our revised FY00 and new FY01 (June) EPS estimates of
$1.10 and $1.35, we still view the stock as quite attractive at current price levels
given our outlook for the company. With CLZR's stock selling at $14, the stock is
trading at an attractive discount to our annual growth rate expectations. If CLZR's
stock traded at a P/E valuation of 15x-20x our estimates, which is equal to our
revenue growth rate projections of 15%-20%, we believe the stock's upside based
on our FY00 and FY01 EPS estimates of $1.10 and $1.35 is realistically in the
range of $20-$25. This represents a potential gain of 42%-78%. We continue to
rate CLZR's stock a STRONG BUY. BlueStone Capital Partners, L.P. is a full
service investment banking and brokerage firm that delivers financial services to
emerging growth and medium size companies worldwide. BlueStone Capital assists
Clients in maximizing their growth by providing sophisticated investment strategies
that are designed to achieve clients strategic, operating and financial goals.
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