Reviewing the recent RBC report on ISTA (2/23/2010). Price target of $6. What is impressive is the EPS growth from 2010 to 2011. $0.10 to $0.40. This is with a gross margin compression of 75.4% down to 69.9%.
The significant and continued ramp-up in sales comes through as the growth significantly surpasses the marginal increase in operating expenses.
So if ISTA can maintain the top line growth, we should see decent price appreciate in 2010. Significant ramp-up in sales growth starts (per their quarterly projections) in Q2 of FY 2010.
I bought some more shares around $3.60. While earnings may take some time, I'm fine with the company's growth. I also think that the company could be taken out by a competitor that has an established sales force and infrastructure, and easily cut millions of dollars of expense.