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Biotech / Medical : VISX -- Ignore unavailable to you. Want to Upgrade?

To: Amy Feller who wrote (787)	1/15/1999 11:42:00 PM
From: John Binford, Jr.	Read Replies (1) \| Respond to of 1754

Visx is now getting to enjoy a P/E ratio closer to its earnings growth rate. Certainly things are looking good for long term earnings growth due to the strong procedure growth ahead.

To: Amy Feller who wrote (787)	1/23/1999 2:38:00 PM
From: Amy Feller	Read Replies (1) \| Respond to of 1754

Bloomberg article out today: Visx Shares Gain on Rising Demand for Laser Vision Correction Santa Clara, California, Jan. 23 (Bloomberg) -- Visx Inc. shares have climbed more than fivefold in the past year as the biggest U.S. maker of lasers used to correct vision has profited from consumers' desires to toss out glasses and contact lenses. Visx has doubled since Nov. 3, when the U.S. Food and Drug Administration approved use of its lasers to treat farsightedness. The company now is the only one in the U.S. market approved to treat farsightedness, nearsightedness and astigmatism. A majority of U.S. adults don't see clearly, and Americans spend more than $13 billion a year on vision correction. By tapping that market, Visx's profit and shares are likely to rise more, said Michael Yellen, a portfolio manager in San Francisco who intends to have the procedure eventually. ''There haven't been any disaster stories'' involving Visx's technology, said Yellen, whose fund, the AIM-Global Health Care Fund, owns shares in Visx. ''It's the kind of medical procedure that just snowballs.'' Visx shares fell 1 3/8 to 56 5/8 yesterday. The shares closed at a record high of 61 13/16 on Wednesday. Lasers correct vision by reshaping the surface of the eye. They can't fix all vision problems -- age-related farsightedness, for example, isn't treatable by lasers because it comes from a decrease in the flexibility of the eye lens. Children, the very old and those with histories of certain eye disorders also aren't good candidates. Millions and Million There are about 60 million Americans who could benefit from laser surgery, said Michael Lachman, an analyst at Hambrecht & Quist with a ''strong buy'' rating on Visx. Many of those candidates may be reluctant to have the procedure either because their vision isn't extremely poor or because of the price -- about $2,500 per eye. Most insurance plans don't cover the procedure. That still leaves millions of potential customers. ''I really feel very good about (Visx),'' Lachman said, who wears glasses and said he's considering getting his eyes corrected. ''The risk is lower now than it's been at any time in the past.'' Visx rival Summit Technology Inc. was the first company to get FDA approval for its laser device in 1995. Summit, though, angered doctors by trying to set up its own vision correction centers. It also failed to concentrate on getting its device approved for use in new treatments, analysts said. 260 a Pop Visx's lasers cost $300,000 to $350,000 each on average. Each time a doctor operates the machine, a card good for one use must be inserted. Visx charges about $260 for each card. Because of aggressive marketing, Visx has pulled ahead of Summit, and its lasers are used to perform a majority of all laser correction eye operations. Assuming a 40 percent tax rate and excluding legal settlement payments, Visx had pro forma net income of $1.19 a share in 1998, up from 39 cents in 1997. Last year, Visx paid $35 million to end a dispute with Summit and ended a partnership formed in 1992. Under the agreement, Visx and Summit operated a venture called Pillar Point Partners, which shared revenue from eye operations using their lasers. Visx, though, contended that it didn't have to share revenue from certain procedures, leading to months of legal wrangling. The two companies now have a royalty-free cross license for their patented technologies, and analysts said new entrants into the U.S. market will likely have to pay to license those technologies. ''I don't see any reason why Visx is not going to get dominant market share and get a lot of money for this,'' Yellen said. ''The hardware part of the market is going to be harder for other companies to crack.'' To be sure, Visx shares are expensive, analysts said. The shares trade at about 69 times per-share earnings, more than double the level of the average stock in the Standard & Poor's 500 Index, which trades at about 32 times earnings. Visx shares fell 6 percent on Thursday after Wade King, an analyst at BancBoston Robertson Stephens, cut his rating on the company to a long-term ''attractive'' from ''buy,'' citing concerns about the price.