CytoSorbents rises as buy rating reaffirmed by H.C. Wainwright, sees multiple drivers ahead
Wednesday, October 15th, 2014
CytoSorbents (OTCBB:CTSO) rose on Wednesday after the critical care-focused company beat expectations with its preliminary third quarter results and had its buy rating reiterated by analysts at H.C. Wainwright, who said multiple growth drivers still remain.
Analyst Swayampakula Ramakanth reiterated his buy rating and 12-month price target of $1.00, on the continued belief the shares are undervalued. The company, which uses blood purification products to treat life threatening diseases, added 6.6 percent today to 27.4 cents.
In the analyst report, the firm cited strong revenue growth, with CytoSorbents announcing preliminary third quarter sales yesterday of nearly $1 million, an increase of 50 percent compared to the second quarter of 2014 and more than 390 percent versus the same period last year.
Based on the latest announcement, H.C. Wainwright expects sales to reach over $3 million for fiscal year 2014, better than its previous estimate of $2.56 million.
The analyst wrote that repeat orders from current customers and existing distributors were drivers for sales in the latest period, which H.C. Wainwright believes could continue into the fourth quarter and beyond based on continued growth in current markets and a potential launch in the Middle East.
Future sales are also expected to increase based on an increased sales force in Germany from 4 to 10 by year-end, and market expansion of certain distributors. H.C. Wainwright is projecting total revenues of nearly $8.15 million in fiscal year 2015.
The key growth driver for CytoSorbents is the US market, the report noted, with the company working to strengthen its resources by installing a cardiac surgery advisory board as well as recruiting a clinical management team to conduct a pivotal clinical trial. The analyst belives the company could be in a position to finalize the trial design and file an investigational drug exemption by the end of this year, in line with previous guidance.
H.C. Wainwright also highlighted the company’s HemoDefend blood purification product, which functions by prolonging the life of old blood cells while keeping new blood fresh. The product has potential applications in transfusions, with results from a phase 3 trial expected later this month at the American Association of Blood Banks conference.
Partnership discussions are anticipated in the near future if positive results are yielded, wrote Ramakanth. “While our current model does not account for revenues from this product we view this as a potential upside,” the analyst said.
The company has also simplified its capitalization structure, and is in the process of completing requirements to up list to an “as yet undisclosed” national exchange, which H.C. Wainwright believes can be completed by the end of 2014.
CytoSorbents‘ technology is based on biocompatible, highly porous polymer sorbent beads that are capable of extracting unwanted substances, such as drugs, dangerous chemicals, toxins, cytokines, free hemoglobin, and antibodies, from blood and other bodily fluids.
