Zeltiq continues to slide on 4Q results, outlook

Zeltiq downgraded by JPMorgan, and shares keep sliding on weak outlook for CoolSculpting sales

Associated Press

NEW YORK (AP) -- Shares of Zeltiq Aesthetics Inc. fell for the second consecutive day Wednesday after the company reported a deeper-than-expected fourth-quarter loss and gave a disappointing forecast for 2012.

THE SPARK: Zeltiq said it faced more competition than it expected during the fourth quarter. That pressured sales of its CoolSculpting system, which is designed to use extreme cold to reduce bulges of fat that don't go away with diet or exercise. A JPMorgan analyst downgraded the stock's rating.

The company said Tuesday that it lost $5.8 million, or 22 cents per share, in the fourth quarter. It lost $3.6 million, or $3.29 per share, in the last three months of 2010. Analysts had predicted a smaller loss of 9 cents per share for the more recent period, according to FactSet.

The company said it expects $90 million to $94 million in revenue in 2012, well below what had been the average analyst estimate of $113.9 million.

Revenue rose 52 percent to $18.8 million during the October-December quarter as it installed 967 CoolSculpting systems.

THE BIG PICTURE: Products that compete with the CoolSculpting system include Solta Medical Inc.'s LipoSonix, which uses ultrasound to destroy belly fat deposits. The Food and Drug Administration approved LipoSonix in September. Zeltiq said Tuesday that "unanticipated product launches and trial offers" pressured sales of CoolSculpting.

The company also said some sales were delayed because it is transferring to a direct-sales strategy in a few markets in Europe and Asia.

THE ANALYSIS: JPMorgan analyst Tycho Peterson downgraded the stock to "Neutral" from "Overweight" Wednesday, saying the company is facing greater costs as it ramps up sales of its product, and LipoSonix is hurting CoolSculpting sales more than expected. Peterson cut his price target to $9 per share from $16.

SHARE ACTION: Zeltiq shares plunged 34 percent Tuesday and gave up another 81 cents, or 11 percent, to $6.55 on Wednesday. The Pleasanton, Calif., company went public in October at $13 per share.

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