Leerink starts Endologix at market perform

Leerink Partners initiated coverage of Endologix (NASDAQ:ELGX) with a “market perform” rating and $13 price target. The stock closed at $12.22 on Friday.

Endologix is the largest abdominal aortic aneurysm (AAA) pure play and holds the No. 4 position in the $1.5-billion worldwide AAA market.

“We think stock price appreciation prospects are tied to the long-term potential of the pending Nellix U.S. launch, where FDA approval remains a matter of when and not if, in our view,” writes analyst Ravi Misra.

“This novel aneurysm sealing device brings to the U.S. market a potential game- changing technology for AAA repair that should drive sustained double-digit revenue growth through 2020 as well as a concurrent ramp in adjusted EBITDA margin,” he added.

Mr. Misra said new product launches in MedTech are usually well received
and Nellix represents a game changing product that can drive incremental market share.

“That said, our analysis suggests that upside potential above our 2020 revenue estimate is limited and valuation already gives credit for this new product launch,” he added.