This is the biggest joke of wall street in a while. VISX is not the joke but rather it is all the knee-jerk money firms trying to ge their clients out of VISX. Everyone has downgraded VISX except one firm.
Visx will be in the 60 and should be in the 60's. Here is gs
09:01am EST 7-Dec-99 Goldman Sachs (KEUSCH) VISX
VISX, Incorporated : ITC finds Nidek not to infringe, VISX fundamentals intact;
GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS GS
Goldman, Sachs & Co. Investment Research
VISX, Incorporated
* * ITC finds Nidek not to infringe, VISX fundamentals intact; TB * *
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* We are maintaining our trading buy on VISX shares. The administrative *
* law judge for the ITC released her Initial Determination last night that*
* Nidek was found not to infringe on VISX's patents. At this point, there *
* is little information as the decision was delivered late yesterday. *
* However, we do know that VISX (1) can appeal to the U.S. Court of *
* Appeals, (2) VISX core method patents remain valid and enforceable until*
* a Court of Appeals ruling, and (3) the company has saved its stronger *
* patents for future suits. While the ITC decision was not a positive for *
* the company, we note that the core patents remain in-place, there is no *
* change to our 1999 and 2000 EPS estimates, and market growth is strong. *
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Investment Research
=================== NOTE 8:53 AM December 07, 1999 ====================
Stk Latest 52 Week Mkt Cap YTD Pr Cur
Rtg Close Range (mm US$) Change Yield
--- ------ ------- ------- ------ -----
VISX, Incorporated TB 88.13 104-18 5667.6 303% 0.0%
--------------Earnings Per Share---------------
VISX Mar Jun Sep Dec FY CY
2000 FY 1.75
1999 FY 0.29A 0.32A 0.36A 0.39 1.36
1998 FY(A) 0.12 0.15 0.16 0.18 0.59
-Abs P/E on- -Rel P/E on-- EV/NxtFY LT EPS
Cur Nxt Cur Nxt EBITDA Growth
----- ----- ----- ----- -------- ------
VISX FY 64.8X 50.4X 2.3X 1.9X NA NA%
===========================================================================
* We are maintaining our 1999 and 2000 estimates of $1.36 and $1.75,
respectively.
* In a somewhat surprising decision, the administrative law judge for the
ITC ruled in an Initial Determination that Nidek did not infringe the
VISX patents. As of last evening, the details of the ITC decision were
limited as management was huddling with its legal counsel. We are aware
that the decision found that (1) Nidek did not violate the L'Esperance
patent and (2) a Trokel patent was found to be invalid due to improper
inventorship.
* VISX has indicated that it will now petition the full Commission of the
ITC for a review of the Initial Determination. If the review is
granted, the Commission is expected to issue its Final Determination by
March 6, 2000. If a review is denied, the Initial Determination will
become the Final Determination. Any Final Determination is subject to a
review by the United States Court of Appeals for the Federal Circuit.
We expect that any appeal process will take several years, so the
overall patent landscape remains intact. As a result, the current
competitive landscape remains status quo.
* It is important to note that VISX sued Nidek for infringement on two
apparatus patents, L'Esperance and one of the Trokel patents. As part
of its overall legal strategy, VISX did not use its strongest patents,
including the base Trokel patent that covers the method of ablation of
corneal tissue. The stronger intellectual property was saved for use in
a separate case against Nidek that is progressing through the Northern
District of California courts. Thus, Nidek may have escaped this court
appearance, but is facing far stronger method patents, rather than the
apparatus patents used in the ITC suit.
* Until there is resolution on several patent infringement suits,
including an appeal at the ITC and the Northern District of California,
VISX's patents remain valid and enforceable. As a result, we see little
change to the competitive position for VISX. The company will still
collect a $250 per procedure fee for surgeries performed on its market
leading installed base. In addition, a strong technology base, superior
service, and sophisticated physician support should help VISX maintain
market share. With our 2000 estimate of $1.75 not assuming any revenues
from license agreements and modest growth in the market to 1.3 million
procedures, we have no reason to change our forecast based on the ITC
decision as business is status quo.
* In our opinion, a key to the near-term performance of VISX shares will
be whether Bausch & Lomb, and to a lesser extent LaserSight, sign
agreements to license the company's core intellectual property. With
the core Trokel patent still valid and enforceable, we believe that
there is a very good chance that both companies will license the
technology from VISX. If a licensing agreement is not struck, we
suspect that VISX will be aggressive in protecting its patents.
* Separately, Bausch & Lomb shares are likely to benefit from yesterday's
news. While we believe that B&L will likely still need to license the
core VISX patents, the ITC ruling could give management some added fire
power in its negotiations with VISX. We expect B&L shares to be strong
today. |
