Leerink Partners Cuts Price Target on Endologix (ELGX) to $8 Following Analyst Day
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Leerink Partners maintained a Market Perform rating on Endologix (NASDAQ: ELGX), and cut the price target to $8.00 (from $11.00), following the company's analyst day. The focus of the presentation was around Nellix. There was news on Wednesday that potential approval has been pushed out ~6 months. This comes following a request for additional info from the FDA. Management also updated 2016 revenue guidance to $198-$200M (vs. $198-$201M prior) as ELGX anticipates more limited Nellix usage in Europe following its label change to a narrower IFU.
Analyst Ravi Misra commented, "We remain MP on ELGX following the company's analyst day at the VEITH symposium. The focus was understandably around Nellix given now narrower instructions for use (IFU) and Wednesday's (11/16) news that potential approval has been pushed out ~6 months given a request for additional info from the FDA. Nellix remains the company's key growth driver and while we continue to believe the device will receive FDA approval (now a potential 2Q18 event vs. 4Q17 prior) the narrower indication is expected to have a negative ripple effect on sales to existing users in Europe that further reinforces our view that meaningful Nellix driven upside to estimates is unlikely. As a result, mgmt also lowered the top end of '16 rev. guidance by $1M as European clinicians begin to adjust usage, and this is expected to have an impact into '17 as well. As a result, our estimates and multiple move lower and PT is reduced to $8 (vs. $11)."
Shares of Endologix closed at $7.81 yesterday.
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