WASHINGTON (AP) -- Shares of Solta Medical Inc. fell more than 10 percent in trading Wednesday after an analyst downgraded the skin device maker on dismal earnings that prompted the company's CEO to resign.
THE SPARK: On Tuesday Solta reported second-quarter results below Wall Street expectations and announced its CEO Steve Fanning would resign due to "unacceptable" 2013 results reported to date. Roth Capital Partners analyst Chris Lewis downgraded the company from "Neutral" from "Buy," noting the company has lowered its annual revenue guidance 13 percent to $165 million, compared with a range of $182 million to $191 million at the beginning of the year.
Analysts surveyed by FactSet expected 2013 revenue of $177.2 million, on average.
THE ANALYSIS: Lewis said in a note to investors that Solta will continue to face challenges from pricing pressure, management uncertainties and sales force turnover.
"While we believe the company has made progress by hiring new reps to address the turnover issues, we expect it may take a few quarters for these new reps to become trained and fully utilized," Lewis said in a note.
THE BACKGROUND: Solta markets laser systems used to remove wrinkles and scars and destroy fat cells, among other uses. The company sells its device to dermatologists but has struggled to compete with lower-priced offerings from competitors in recent quarters. The company said system sales fell 40 percent in the most recent quarter, excluding products from Sound Surgical Technologies. Solta acquired the company earlier this year for more than $30 million.
SHARE ACTION: Shares of Hayward, Calif.-based Solta Medical Inc. fell 26 cents, or 10.4 percent, to $2.25 in afternoon trading. The stock is down nearly 16 percent in the year to date.
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