On Apr 3, Zacks Investment Research downgraded Echo Therapeutics, Inc. to a Zacks Rank #4 (Sell).
Why the Downgrade?
This Philadelphia-based developer of transdermal skin permeation and diagnostic medical devices reported its fourth-quarter and full-year 2013 results on Mar 27. The fourth-quarter reported loss per share more than doubled year over year to $3.9 million or 36 cents. However, adjusted loss per share of 35 cents was narrower than the Zacks Consensus Estimate of a loss of 36 cents.
Echo Therapeutics' selling, general and administrative (SG&A) expenses scaled up 31.3% to $8.4 million during 2013. Factors like increased personnel costs, legal costs and expenses related to prelaunch marketing and manufacturing activities contributed to this hike in SG&A expenses.
In addition, the company's research and development (R&D) expenses for 2013 also increased 29.9% year over year to $11.3 million. This rise was primarily driven by increased engineering and design expenses incurred on account of outside contracts and personnel relating to the Symphony development. As a result of higher R&D and SG&A expenses, Echo Therapeutics saw a 31% year-over-year increase in operating loss to $19.6 million in 2013.
Given broad market fluctuations that have already adversely affected the market price of Echo Therapeutics' common stock, management has announced that the company's stock price is volatile at present and has every possibility to fluctuate in the near future.
The Zacks Consensus Estimate of a loss for 2014 has rose 7.7% to 98 cents per share over the last 30 days. However, for 2015, the Zacks Consensus Estimate of a loss remained flat at $1.07 over the same period.
Other Stocks to Consider
Investors interested in the Medical Instruments space may consider better-ranked stocks like Cynosure, Inc. , Delcath Systems, Inc. and Syneron Medical Ltd. . All these stocks carry a Zacks Rank #1 (Strong Buy).