Lazard downgrades Palomar Medical, shares hit multi-year low
NEW YORK—Shares of Palomar Medical Technologies Inc. fell to their lowest point since 2004 on Friday, after the company reported a first-quarter loss on lower revenue and a Lazard Capital Market analyst downgraded his rating on the stock.
Shares dropped $1.18, or 9.8 percent, to close at $10.81, having earlier reached a four-year low of $10.76. A year ago at this time the stock traded as high as $42.43.
Lazard analyst Assaf Guterman lowered his rating to "Hold" from "Buy," saying the light-based cosmetic treatment systems maker's results were "disappointing on several levels."
He noted that although management cited continuing turnover in its salesforce as the main reason for the weak revenue, they admitted that contributions by seasoned salespeople declined at a rate of roughly 40 percent as well.
"This leads us to believe that the slowing economy has played a major role in these revenue declines," Guterman wrote in a note to clients.
Guterman said Palomar shares are trading at a premium to its competitors, but with an uncertain outlook for Palomars home-use device, the company's relatively late entrance to the laser lipolysis market, and continued weakness in its base business, he thinks investors should "step aside."
But Needham analyst Dalton Chandler said that despite a very disappointing quarter, he thinks there's good reason to expect better times ahead. He lowered his price target to $18 from $23, but maintained a "Buy" rating.
"Despite a big miss on the revenue line the company had a pro forma profit and cash from operations was a loss of just $1 million," he wrote in a note to clients. "Granted, PMTI has some issues, principally its domestic sales force, but we now have a company that is operating around break-even with a great balance sheet and a major new product (Aspire for laser assisted liposuction) on the horizon, and the stock is trading for less than 2x cash!"
