Natixis Bleichroeder Initiates Coverage with a Buy Rating and $10 target
NOT SURE WHY YAHOO NEVER PICKED IT UPNxStage Medical
Medical Devices U.S. July 22, 2009 Initiating Coverage: Home Hemodialysis — From NxStage to Center Stage BUY Current Price $5.34 Target Price $10.00 Market capitalization $248.6 million Shares outstanding 46.6 million 12-month high/low $6.05/$1.90 Reuters NXTM.O Bloomberg NXTM NASDAQ 1,916.2 Joshua Zable Senior Analyst 212-698-3147 Ashim Anand, Ph.D. Analyst 212-698-3141 We Are Initiating Coverage on NxStage Medical with a Buy Rating and $10 Target Price. Our target price is based on a 3x–4x target EV/sales multiple on our 2010 sales estimate. Our target multiple represents a slight premium to its peer group multiple of developing medical device companies, which is warranted, in our view, due to its faster underlying growth rate of both sales and operating margin expansion in addition to its unique competitive advantage in its industry. To fortify our valuation, we also ran a discounted cash flow analysis, which also yielded a similar valuation. Near Term: Fundamentals and Financials Should Improve over the Next Twelve Months. NXTM is poised to improve fundamentally in the near term, in our view, as a result of multiple distribution agreements in both its Medisystems® and hemodialysis business. These distribution agreements should not only facilitate top-line growth but should also benefit the company on a gross and operating margin basis. A detailed discussion of these agreements and their corresponding benefits are discussed in the report to follow.