Roth ups TearLab price target to $7
January 22, 2013 by Jennifer Poland · Leave a Comment
Roth Capital Partners has raised its price target on “buy-rated” TearLab (NASDAQ:TEAR; TSX:TLB) to $7 from $5, saying market awareness of TearLab is on the rise and TearLab system placements are expected to be strong in 2013. The stock closed at $5.48 on Monday.
“Our valuation analysis now centers on our revenue projection for fiscal 2015 [of $46-million], when we anticipate TearLab will have broader private pay coverage,” writes analyst Matt Dolan.
TearLab has first-mover advantage with its point-of-care diagnostic platform for the diagnosis of dry eye disease using tear film Osmolarity.
With CMS reimbursement, CLIA-waiver, and inclusion in AAO’s Preferred Practice Patterns, “we believe the company’s sales pitch is becoming more straightforward, focusing on the technology’s strong clinical and economic argument as opposed to the logistical obstacles it faced in the past,” Mr. Dolan said. He figures the company will steadily increase its sales force this year with an ultimate target of 40 territories in 4 regions.
As new systems are installed, he expects revenue growth to materialize when sites begin integrating tear Osmolarity testing into practice protocols and re-order test cards.
“Our current utilization projections are conservative, considering we only reach 1,500 cards per system in 2015, which represents the low end of TearLab’s sales utilization program,” Mr. Dolan said. “Management has previously stated that most new customers are choosing the higher, 2,400 cards per year minimum contracts. In our view, this is a good guide, although some high volume practices may skew this average over time under the recently introduced Master’s program.”
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