NEW YORK—Analysts said Monday Advanced Medical Optics Inc. is executing well on its new contact lens and dry eye product offerings, but expressed concern about the outcome of the Food and Drug Administration's panel meeting on Lasik surgery later this month.
Wachovia Capital Markets LLC analyst Larry Biegelsen said Advanced Medical's launch of its Tecnis multifocal contact lens, Blink Tears dry eye treatment and iFS IntraLase laser upgrade will go a long way toward building investor confidence in the company's ability to execute.
In a note to clients, Biegelsen said Tecnis has the potential to be a significant contributor to the company's growth, given that it is Advanced Medical's initial foray into the largest market for implantable lenses. And with the lack of dry eye treatment options, he thinks his $12 million 2008 sales forecast for Blink Tears may be conservative. Finally, the iFS laser upgrade, which increases safety and precision of the device, will likely help fend off competition.
But the declining U.S. economy continues to impact the number of laser vision correction surgeries, and Biegelsen cautioned investors that the outcome of the upcoming FDA Lasik advisory committee meeting on April 25 will likely be neutral at best.
In February, the FDA responded to multiple patient complaints by agreeing to hold a public meeting to discuss patient satisfaction with Lasik vision correction procedures.
"A best case scenario is little-to-no negative headlines in the media and the panel endorses the long safety of Lasik and encourages further use of femtosecond lasers," he wrote in a note to clients. "On the downside, negative media coverage of unhappy Lasik patients and a panel recommendation to narrow the indications could drive volume down further. We think the most important variable is the media coverage which tends to be negative."
Goldman Sachs analyst Lawrence Keusch said that while the new product launches are well-balanced across all three businesses, he doesn't think any are compelling enough to warrant buying into the stock amid Lasik procedural uncertainty and the risk of downward revision to the company's 2008 earnings per share guidance.
In February, the Santa Ana, Calif.-based eye care products maker cut its outlook, partly on a forecast for fewer-than-expected laser procedures.
Keusch maintained his "Neutral" rating and $21 6-month price target on the stock.
However, Jefferies analyst Peter Bye said laser vision treatments are holding up despite economic difficulties. AMO shares, which closed at $21.92 Thursday, are his top pick in the sector. He thinks the stock will rise for the rest of the year as the company's performance improves.
The stock edged up 17 cents to close at $22.14 Monday.
