Roth Concerned With 'Competitive, Pricing Uncertainties' At Cogentix Medical, Downgrades

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Cogentix Medical Inc CGNT reported lower-than-expected 1Q16 revenues and GAAP net loss, but its operating cash generation was positive for the second consecutive quarter. Roth Capital Partners’ Chris Lewis downgraded the rating for the company from Buy to Neutral, with a price target of $1.15, saying increased competition and pricing uncertainties could hinder the company’s growth prospects.

Although the company has executed its post-merger strategy of driving revenues and cost synergies well, there is need for better visibility on Urgent PC growth and price sustainability to gain “higher conviction on the name,” analyst Chris Lewis noted. Cogentix Medical’s Urgent PC customers declined from 1,348 in 4Q15 to 1,014 in 1Q16.

Increased Competition

The recent launch of an overactive bladder PTNS product by Medtronic PLC MDT has led to some customer losses for Cogentix Medical.

“While we believe CGNT’s product is superior to Nuro in terms of clinical data, functionality, and ease of use, MDT will undoubtedly attempt to leverage its large Urology sales force and installed customer base who use Medtronic's overactive bladder neuro stimulation implantable (InterStim) to drive Nuro adoption,” Lewis wrote.

This could lead to market share loss and pricing pressures for Cogentix Medical, the analyst said.

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Posted In: Analyst ColorDowngradesAnalyst RatingsChris LewisROTH Capital Partners
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