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SLTM Message Board

  • the49erswinbig the49erswinbig Sep 14, 2013 7:34 AM Flag

    Takeover Premium

    New CEO was buying stock at $1.75. Since those purchases, SLTM missed Q2 expectations by a wide margin. Consequently, it appears that there is at least 40 or 50 cents of takeover premium in the stock.

    Q3 will likely be a challenging quarter given all of the turmoil with management changes, new VP of sales, and product integration. Some clarity from Management on: (1) termination or implementation of approved reverse stock split, (2) have there really been credible offers for the Company as Voce states, (3) is Management's plan to get a permanent CEO and run the Company or would they prefer to sell. Competitors are likely using the sale discussions against their customers. Zeltiq continues to hit them hard in the market. Lack of transparent dialogue with shareholders is not helping the situation.

    Unless a takeover happens, it is hard to justify buying stock at this level given current fundamental challenges. New LOC has a trailing 12 month $15 million EBITDA threshold. New CEO needs to properly set analyst expectations and start achieving those estimates in a consistent manner. Solta definitely has great assets, but new management needs to work with Voce to sell the Company or show that they can finally execute to drive revenues and higher EBITDA. It is hard to get constructive on the stock at current levels without some clarity. We are really looking at a binary event: either a takeover happens or Management resets expectations and works on creating value over time through better execution. It is hard for most investors to know which is more likely.

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    • The stock is starting to get interesting, but I still don't think you want to buy ahead of Q3 results on Nov 11th. Downside in this sector is usually about 1x EV/REV. Only CUTR and ELOS trade below that at .75 & .95x respectively. If we assume a reasonable revenue run rate of $165 million and net debt of $35 million with nearly 100 million fully diluted shares outstanding (thanks to Fanning after all the acquisitions have been fully paid for), that gives a potential downside of $1.50 or so. Stocks can overreact, but if management delineates a solid operating plan, it is probably a reasonably safe entry point with tremendous upside if management does execute or the Company is ultimately sold. However, they could still surprise everyone this quarter with a deal or amazing results, but that appears unlikely.

    • Goldman Sachs upgrades ZLTQ to buy this morning and raises price target to $12. GS expects ZLTQ to have a strong Q3. Will the rising tide help lift SLTM Q3 or is ZLTQ taking market share? If the new SLTM CEO delivers a strong Q3, that should significantly bolster future valuation expectations. However, it still might take a couple of quarters to right the ship.

    • "Unless a takeover happens, it is hard to justify buying stock at this level given current fundamental challenges." If a takeover doesn't happen then Voce, Callan, Matusow have been completely lying. There are at least 5 interested buyers according to Matusow. If we don't catch a decent bid, there was a lot of deceit all around.

      • 2 Replies to waterbottle226
      • I think Voce et al are acting in the best interests of shareholders. Removing an entrenched management team is not an easy process, particularly when there is no 5%+ shareholders involved in challenging them. Also, getting strategic buyers in this laser sector is not as easy as in other aesthetic lines and might take longer than expected. Frankly, I would be surprised if the new CEO did not want to show that he could execute and create value and sell at a higher price next year.

        Clearly, investors are frustrating with the lack of historical execution and rightly so. Most investors (including the ones you mention) would undoubtedly welcome a transaction. Q3 is being reported on Nov 11th. It will be interesting to see how management handles guidance. After that, we have the holiday season. Consequently, any transaction would likely be delayed until Q1. If we could get a solid Q4 and a fair offer in Q1 2014, it would be a nice way to introduce the new year.

      • what an idiotic statement. these things can take time. actually, the stock is grossly undervalued for one. 2. I own a ton of shares and have not sold, neither has callan, so what benefit do we achieve by "lying" as you say? we all hold "bags" interested parties mean nothing unless company solicits bids, but you prob have no idea how that process works.

    • YAAAAWN!!!