UPDATE: Cantor Fitzgerald Raises PT to $14 on Obagi Medical Products
Cantor Fitzgerald raises its price target to $14 on Buy-rated Obagi Medical Products (NASDAQ: OMPI) as the company removes T overhang while pursuing a low-risk growth strategy.
Cantor Fitzgerald says, "Two positive developments: (1) Obagi has resolved its TX dispute and can reinstate HQ sales in the state. We expect a gradual ramp as TX physicians work down existing arbutin (non-HQ) inventories and begin stocking HQ products. (2) The company expects to launch its e-pharmacy in 3Q:12, and management believes that the initiative will result in a 5-year CAGR of 15-20%. Management believes that it can recoup its ~$11M initial investment within 12 months and thinks that the site will require approximately $2-3M in incremental costs to the business, which we view as a low-risk investment."
OMPI closed at $11.89 a share yesterday.
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