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CapStone Downgrades Endologix (ELGX) to Hold; Outlook May Be Marginal At Best

February 19, 2010 9:23 AM EST
Get Alerts ELGX Hot Sheet
Price: $0.22 --0%

Rating Summary:
    7 Buy, 7 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 2 | Down: 23 | New: 24
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CapStone downgrades Endologix, Inc. (Nasdaq: ELGX) from Buy to Hold. PT $6.

CapStone analyst says, "Despite guiding to higher Y/Y revenues in 2010 which could be between an increase of 18% to 26%, or $62 million to $66 million, management also revealed that it would increase its sales force by 30% and its R&D expenditure by 70%. Although management believes it will deliver positive GAAP EPS in 2010, we believe it will be marginal at best and may even miss the mark. We do applaud the fact that the company can now mange these investments through internal cash generation. As a result, we are lowering our investment rating to HOLD. In our opinion, investors have waited too long for ELGX to produce positive EPS. And while the investments in its sales force and additional R&D to support superior product development may be noble, we do not believe the stock will outperform over the next 12 months...We are projecting break-even GAAP EPS in Q2 and Q3 and a penny in Q4 full year GAAP EPS of break-even on revenues of $64 million."

To see all the upgrades/downgrades on shares of ELGX, visit our Analyst Ratings page.

Endologix, Inc., incorporated in March 1992, develops, manufactures, markets and sells treatments for aortic disorders.

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