Leerink upgrades Cardiovascular Systems

Leerink Partners upgraded Cardiovascular Systems (NASDAQ:CSII) to “outperform” and raised its price target to $30 from $23. The stock closed at $22.60 on Friday.

“Now with two solid quarters in a row of stable-to-improving growth and a new CEO in place, we believe the company has reached a fundamental inflection point after several quarters of underperformance in light of sales force disruptions and poor execution,” writes analyst Danielle Antalffy.

“We have always believed that the company is well-positioned to be a market leader in a peripheral atherectomy market, growing sustainably in the high-single-digit range, and a coronary atherectomy market growing even faster, given its competitive advantage in both calcified lesions and below the knee – both heavily underpenetrated markets within the space,” she added.

Beyond the top line, she said the company’s recent efforts to control costs through a restructuring in March that includes an 8% reduction in the workforce could push the company to profitability faster than previously expected.

Ms. Antalffy said she now believes the company can become profitable by mid-to-late fiscal 2018, ending June 30, which is four quarters earlier than an earlier late fiscal 2019 assumption. And the company seems poised to turn cash flow positive even sooner – in the current fiscal year ending June 30, 2017.

“This pathway to profitability can and should enable Cardiovascular Systems to attract a broader investor base and attract new money to the name that can continue to support the shares,” she added.