Medical device maker Endologix's shares slump on weak sales forecast

Fri Feb 28, 2014 11:45am EST

Feb 28 (Reuters) - Shares of medical device maker Endologix Inc fell as much as 28 percent after the company forecast its slowest annual revenue growth in a decade for 2014, hurt by weak sales in the United States.

The maker of minimally invasive treatments for aortic disorders also said on Thursday revenue at the end of December was hurt by a reduction in medical procedures in the United States.

The weaker-than-expected outlook was also caused by delays in the product launches and increased competition, analysts said. But they added these issues appeared "fixable".

"Some of these issues will be resolved over time, and likely ease throughout the year," said BMO Capital Markets analyst Joanne Wuensch.

The company forecast full-year global sales growth of 11-15 percent for 2014. This marks its slowest growth rate since 2004.

However, Rick Wise, an analyst with Stifel, Nicolaus & Co, expects Endologix to bounce back to a growth rate of 20 next year driven by the company's experimental device, Nellix.

Nellix is being tested to treat an enlargement of the blood vessel that supplies blood to the abdomen.

Wise said Nellix was a potential workhorse graft that could meaningfully expand Endologix's market share.

The company commenced a limited market introduction of the Nellix system in Europe last year, and expects to launch Nellix in the United States by the end of 2016.

Wuensch cut her price target on the company's stock to $17 from $20, while Wise lowered his target price to $17 from $20.

Shares of Endologix were trading down 24 percent at $13.55 in late morning trade, after earlier hitting a low of $12.86 on Nasdaq. The stock has risen roughly 4.7 percent since the company reported third-quarter results in October. (Reporting by Shailesh Kuber; Editing by Savio D'Souza)