Growing Spectranetics a Hold

Spectranetics Corporation (SPNC - Snapshot Report) acquired the endovascular business of Kensey Nash and launched a new Lead Locking Device. SPNC also announced the settlement of intellectual property dispute with Medtronic (MDT - Analyst Report).

The company continues to drive revenue growth in the high double-digits from the successful initiatives at driving greater awareness and acceptance in using laser technology to treat cardiovascular disease. The rental program is leading to greater laser placements, which is driving disposable products' revenue higher.

New products like the TURBO-Booster are expected to help the company penetrate further or expand targeted markets. In particular, the TURBO-Booster allows SPNC to participate fully in above the knee procedures that in the U.S. comprise according to SPNC two-thirds of all endovascular procedures in the leg.

The risks to growth include such items as a possible increase in competition in the atherectomy market, possible disruption to operations from the relocation and consolidation of U.S. operations, and the increase in SG&A and R&D spending.

At its current price of $9.72 per share, SPNC is trading at 3.1x our current fiscal year revenue estimate of $106 million, which is at a discount to the group average multiple of roughly 3.5x. We believe the stock is fairly valued at 3.5x our 2008 revenue estimate. Our target price is therefore $11.00.

Read the full analyst report on SPNC

Read the full analyst report on MDT