Improved Outlook for VNUS Medical

VNUS Medical Technologies, Inc. (VNUS) reported better-than-expected fourth quarter results on stronger generator placements, higher ClosureFAST revenues, better gross margin and lower litigation expense. ClosureFAST and better reimbursement is driving top-line, while cost initiatives and lower litigation expense is improving profitability.

Management now expects $82-$86 million in 2008 revenues and 2008 EPS of $0.19-$0.24. Our estimates and price target also increase. The company reported better-than-expected fourth quarter results on stronger generator placements, higher ClosureFAST revenues, better gross margin and lower litigation expense.

The originally expected October 29, 2007 patent trial against the laser companies has been rescheduled to June 23rd 2008. We are increasing our revenue and EPS estimates on the improved revenue and EPS outlook. At the current price, VNUS trades at roughly 3x 2009 revenues, a small premium to the 2.8x 2009 revenue average of comparables. We believe the company should trade in-line with comparables. At 2.9x 2008 revenues, our target moves to $16.

Read the full analyst report on VNUS.

Read the full analyst report on VNUS