Cutera Outlook Less Strong

Cutera Inc (CUTR - Snapshot Report) designs, manufactures and markets laser and light-based aesthetic applications. Since it commenced commercial production in 2000, CUTR has quickly grown to become a leading player in the laser treatment category.

The company’s second quarter revenues met our expectations. However, EPS markedly missed our estimates on lower product revenues and higher international marketing expenses. SG&A was hurt by the increase in international sales, which carry higher marketing expenses.

International markets, for now, continue to grow and product upgrades like Pearl, service revenues and Titan recurring revenue were all solid in the quarter. Our forward estimates are reduced to reflect a more challenging environment with limited visibility, but we note any improvement in the U.S. economic outlook could present upside to our estimates.

Any improvements in the U.S. economic outlook will not be immediately felt on CUTR’s top line. At the current price, CUTR trades at a 1.5x our 2008 sales estimate, inline with the industry average. We are comfortable with this valuation due to the weak near-term outlook. Our target price moves to $10.80. Our recommendation remains Hold.

Read the full analyst report on CUTR

Read the full analyst report on CUTR