Rodman starts LabStyle Innovations at buy

Rodman & Renshaw has initiated coverage of LabStyle Innovations (NASDAQ:DRIO) with a “buy” rating and $12 price target. The stock closed at $5.40 on Friday.

LabStyle is an emerging digital health company focused on the monitoring and management of diabetes.

Analyst Raghuram Selvaraju writes that the company has developed an integrated system to enable diabetics to continuously monitor their blood glucose levels; generate real-time data using smartphone interface capability with both iPhone and Android devices; and compile databases that can permit broad-based analysis of user behaviour in order to optimize disease management.

"This approach, the Dario Smart Diabetes Management Solution, is the only product currently available that combines a multi-feature software application with a pocket-sized, combinatorial blood glucose monitoring device, called the Dario Smart Meter,” he added.

LabStyle has obtained approval for the Smart Meter in both the U.S. and several ex-U.S. countries, including the UK, Netherlands, Canada, New Zealand and Australia. Currently, the company is in the process of ramping up sales of the Dario Smart Meter, including the disposable test strips, Mr. Selvaraju said.

Based on sales projected in Type 1 diabetes, he said LabStyle could generate peak annual Dario product sales, based only on test strips, of roughly $90-millon.