BSTE Wachovia note details :
Wachovia Sec
EXPANDING BNP APPLICATIONS AND MARKET: Near 40 BNP clinical studies are being published
this spring, most focused on new applications including: heart attack risk stratification, heart surgery
prognosis, pulmonary disease management, and high risk screening (i.e. obese patients). Most of the
research uses BNP; a few studies use pro-BNP. BNP is set to become the broadest applied, highest
volume cardiac blood marker. We now expect U.S. BNP volume growth to exceed 100% this year.
FIELD CHECKS: Our checks reveal a stable competitive environment and continued BNP adoption.
Abbott's impact has been muted given BNP test problems and distraction from a troponin recall. We
find no evidence of Dade pre-selling and assuming a Q303 Dade pro-BNP launch, full impact won't be
felt by BSTE until Q403. Bayer is emerging as Biosite's most significant BNP competition. Biosite
continues to win new smaller accounts and Bayer continues to cannibalize high volume sites.
INCREASING ESTIMATES: We are increasing our EPS forecast for BSTE by $0.03 for Q204 and
$0.05 for the full year 2004 based on our assumption of more robust BNP market growth and a muted
competitive impact form Abbott. Our model calls for Biosite to grow its U.S. BNP volumes at a
conservative 30% clip in a 100% growth market for the balance of the year, its market share should be
in the 50% to 60% range by year end.
BSTE trades at 20.0x our 2004 EPS forecast of $2.00, below small cap medtech value peers (22.0x). We
expect multiple expansion in 2004 as estimates rise and investors assign more value to BSTE`s stroke
product. Our $49-53 forward valuation range is 22-24x our 2005 EPS forecast of $2.20. Risks include
competitive BNP launches and slow POL (physicans` office lab) adoption.
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