Syneron Medical Ltd (ELOS)

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Syneron's been spanked enough, says CIBC

07.3.06 | 15:29 By Shirley Yom-Tov

Last December, a moment before Syneron (TASE, Nasdaq: ELOS) warned the market that it would be missing fourth-quarter forecasts, CIBC downgraded the medical technology company.

The investment bank slashed its price target and anybody who heeded CIBC and sold the stock saved himself a 30% dive in share price from then to now.

Back in the present, CIBC feels that it's time to get back into Syneron, which makes lasers for cosmetic applications. The investment bank has upgraded its stock to Outperform and set a new 12-month price target, at $40. That is a hefty 48% above its closing price on Nasdaq last night.

Syneron held a conference with analysts at the American Association of Dermatology and the CIBC people came out of feeling upbeat about developments in the aesthetic therapies market, the bank explains.

One of Syneron's products is VelaSmooth, used to fight cellulite, and the analysts feel the company is well positioned to benefit from the upbeat trends in the sector.

In its presentation, the Syneron management predicted that the market for laser cosmetic treatments would continue to grow by 20% a year. The management said there are 300,000 people engaged in the field who could be potential clients for devices of the type the Israeli company sells.

At present Syneron is launching a new product, e-Line, which is supposed to tighten skin. Rival company Lumenis (Nasdaq:LUME.PK) sells a similar product to rejuvenate skin and remove unwanted hair. Syneron has an advantage in greater recognition of its brand name, the analysts suggest.

During 2006 Syneron is expected to seek regulatory approval to market a device for the noninvasive treatment of fat deposits. It is presently looking for a strategic marketing partner that sells directly to private consumers, to pitch a household skin rejuvenating product. CIBC believes it will be announcing an agreement this year.

The investment bank's $40 price target is 20 times estimated 2006 earnings per share or $2 per share, translating into profit of about $55 million. Syneron stock has been punished since the disappointment with its fourth-quarter results, CIBC writes. Time to stop the spanking.

http://www.haaretz.com/hasen/spages/691300.html

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