Vital Images Not Too Crucial

Vital Images, Inc. (VTAL - Snapshot Report) develops, markets, and supports medical visualization and analysis software for use primarily in clinical diagnosis, disease screening, and therapy planning. The company's software applies proprietary computer graphics and image processing technologies to a wide variety of data supplied by computed tomography (CT), magnetic resonance (MR), and positron emission tomography (PET) scanners.

VTAL reported Q3 EPS that beat our estimate by $0.04 on revenue that also exceeded our forecast. Results continue to be impacted by the slowdown in the CT and PACS markets and greater-than-expected impact from the Deficit Reduction Act.

We lowered our FY08/FY09 revenue estimates. Management reiterated its FY08 revenue and EPS guidance. Management expects revenue and EPS to be in the lower half of the ranges. Our target price is based on a price-to-revenue multiple of roughly 2.6x FY09 revenue estimate.

Read the full analyst report on VTAL