Leerink Partners Starts Endologix (ELGX) at Market Perform

September 6, 2016 6:22 AM EDT
Get Alerts ELGX Hot Sheet
Price: $11.52 --0%

Rating Summary:
    15 Buy, 2 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 3 | Down: 2 | New: 0
Trade ELGX Now!
Join SI Premium – FREE

Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.

Leerink Partners initiates coverage on Endologix (NASDAQ: ELGX) with a Market Perform rating and a price target of $13.00.

Analyst Ravi Misra commented, "ELGX is the largest abdominal aortic aneurysm (AAA) pure play and holds the #4 position in the $1.5B WW AAA market. We think stock price appreciation prospects are tied to the long-term potential of the pending Nellix US launch, where FDA approval remains a matter of when and not if, in our view. This novel aneurysm sealing device brings to the US market a potential game-changing technology for AAA repair that should drive sustained double-digit revenue growth through 2020E as well as a concurrent ramp in adj. EBITDA margin. New product launch stories are well received in the MedTech universe; for our part we think Nellix will obtain significant adoption, and we acknowledge the potential for accelerating double-digit revenue growth led by significant uptake of Nellix in the US through 2020. But we think upside potential above our current out-year revenue estimates is limited, and that valuation already gives credit for this new product launch. While we believe TRIV-related synergies are achievable and model similar GMs and opex dollar spend in line with mgmt's post-TRIV integration assumptions, our lower sales estimate leads to a lower adj. EBITDA margin (~12% in 2020E vs. the company's 20% est.). Thus, we remain on the sidelines as we are not yet convinced that there is enough Nellix revenue upside beyond our current thinking to support a higher multiple given that ELGX already trades at a ~1x premium on EV/'16E Sales (5.7x) vs. other small cap high growth peers."

For an analyst ratings summary and ratings history on Endologix click here. For more ratings news on Endologix click here.

Shares of Endologix closed at $12.22 yesterday.

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In

Related Categories

Analyst Comments, New Coverage

Add Your Comment