I-Flow shares fall on Piper Jaffray downgrade to 'sell'
LAKE FOREST, Calif.—Shares of drug delivery systems developer I-Flow Corp. fell Wednesday after a Piper Jaffray analyst downgraded his rating of the company to "Sell" on concerns about continued growth.
In midday trading, I-Flow shares had dropped $1.06, or 8 percent, to $12.14.
Piper Jaffray analyst Mark J. Mullikan said Thursday he does not think management's 20 percent revenue growth guidance in 2008 is realistic.
"We are pessimistic on I-Flow shares due to the commodity nature of its product offering, limited operating leverage in the business, and weak clinical data supporting the On-Q PainPump," he wrote, adding that the company also needs to boost its sales force in order to meet its projections.
Mullikan cut his price target to $10 from $14 and trimmed his full-year 2008 and 2009 revenue estimates to $137 million and $156 million, respectively.
Analysts surveyed by Thomson Financial are expecting revenue in the two periods of $142.1 million and $173.9 million.
On May 2, I-Flow reported a first-quarter loss of $537,000 or 2 cents per share, compared with a year-ago loss of $921,000, or 4 cents, in the prior-year period. Revenue rose 17 percent to $28.4 million from $24.3 million in the year-ago period.
Analysts were expecting a loss of 3 cents per share on revenue of $30.5 million in the quarter.
Chairman and CEO Donald M. Earhart said then that total revenue would grow 20 percent, with stronger performance in the second half of the year as I-Flow launches new products.
Sidoti & Co. analyst Gregory R. Brash, who has a "Neutral" rating on shares, cut his price target from $15 to $12 on May 2 citing a slowdown in voluntary surgical procedures and decreased spending by hospitals on discretionary medical devices.
