Stifel ups Obalon Therapeutics to buy; PT to $3 from $2.50

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Stifel upgraded Obalon Therapeutics (NASDAQ:OBLN) to “buy” from “hold” and raised its price target to $3 from $2.50, saying the company is entering 2019 with “multiple incremental/critical adoption drivers now in place...helping to drive increasing commercial traction following modest, initial commercial success over the prior two years.” Shares of Obalon closed at $1.96 on Feb. 22.

Obalon focuses on developing and commercializing medical devices to treat obese and overweight people by facilitating weight loss.

Analyst Rick Wise writes that Obalon’s adoption-drivers include new technology approvals, encouragingly strong/supportive real-world clinical data, and a refined/ refocused sales effort, all led by a new CEO.

“Although 2018 might be more accurately viewed as an Obalon re-boot, our positive impression of the company’s differentiated gas-filled intra-gastric balloon technology and meaningful opportunity to address the sizable obesity market is little changed,” he added.

However, he said that it is still unclear whether “these positive elements will quickly or gradually drive more impressive commercial traction.”

Stephen Kilmer