UPDATE: Credit Suisse Upgrades HeartWare Following 2Q Results Report

In a report published Friday, Credit Suisse analyst Bruce Nudell upgraded HeartWare HTWR from Neutral to Outperform, but lowered the price target from $105.00 to $96.00.

In the report, Credit Suisse noted, “Based on HTWR's 2Q results we estimate that the US LVAD market grew roughly 21% this Q (ex-stocking but including PVAD/IVAD), implying ~1% HTWR sequential share gains (ex-stocking), which was light of our 2% estimate and likely light of consensus. HTWR also pushed back expectations for its US MVAD trial / DT extension trial enrollment by 12 months / 1 quarter. Despite these challenges we see the move in HTWR shares in the past 3 months as overdone. If HVAD stroke rates are tamed, consistent with our expectations (we expect data to this effect could be shown at HTWR's BTT PAS presentation 4/2014), then the surgical versatility of the HVAD (thoracotomy approach, etc.) could confer some advantages over the HMII (despite the requirement for closer attention to blood pressure and INR), allowing the HVAD to achieve ~50% US market share over time (consistent with our recent survey & with performance in Europe where HVAD sales exceed HMII with ~48% overall share) despite the sluggish 2Q share gains. As a result we are upgrading HTWR to Outperform from Neutral and lowering our DCF-based TP to $96from $105 based on slightly lower market growth assumptions and a slightly higher WACC.”

HeartWare closed on Thursday at $83.52.