Here is the whole thing. As usual, GS med tech has not been very good since in their note going into Q3 they said STXS is one of their best ideas for the latter half of 2007. GS timing seems to be out of phase.
=======================
4Q preannouncement a hard miss, lowering price target
January 16, 2008
What's changed
Stereotaxis pre-announced 4Q 2007 results. Key points: (1) Revenues of $10 mn, fell short of the Consensus estimate of $16 mn. 7 systems (1 US, 6 OUS) were installed during the quarter. Mgmt attributes a portion of the shortfall to the delay in FDA approval of the irrigated catheter. (2) The backlog of $59 mn (up from $58 mn in 3Q), reflects a deceleration in the new order activity on a sequential basis. (3) The irrigated catheter has received FDA approval; manufacturing ramp and training for the irrigated catheter is expected to be completed by mid-2008. (4) We are lowering our 2008/2009 EPS to ($0.80)/($0.17) from ($0.56)/$0.13 to reflect 4Q results.
Implications
Although management had indicated in the past that the delay in approval for the irrigated catheter could undermine previously established 2007 guidance, the substantially worse-than-expected 4Q results are likely to raise questions regarding hospital discretionary spending patterns and/or competitive dynamics. Despite the near-term concerns, we continue to believe that Stereotaxis remains on track to become an important tool in the treatment of atrial fibrillation, behind the benefits of magnetic navigation, automation and safety. Over the long-term, we anticipate that Stereotaxis could be an important asset for a large capital equipment company, especially with the track record of the CEO selling companies in the past. In the near-term, we see the shares as range-bound given the back-end weighting for the year, and the full launch of the 8-mm irrigated catheter in the 2H of 2007. We maintain our Neutral rating.
Valuation
We are reducing our 6-month price target from $15 to $8, based on an equal weighting of our 10-year DCF and EV/sales analyses. |
