Cantor Fitzgerald Assumes Coverage Of Glaukos Corp With Buy, $35TP

Cantor Fitzgerald has assumed coverage of Glaukos Corp GKOS with a Buy rating and $35 price target on the market potential for its iStent device in Glaucoma treatment.

"Through innovation, we believe the company can not only maintain but likely expand its leading position," analyst Elemer Piros wrote in a note.

The analyst estimates, in its third year on the market, iStent was used in over 70,000 procedures in 2015. iStent sales is expected to grow on its established trajectory ($100 million in sales expected in 2016).

The Laguna Hills, California-based company is working on a smaller and versatile version known as iStent Inject, with data expected in the third quarter of 2017. The analyst said it could open up the non-surgical glaucoma market, expanding the patient pool from 800,000 to about three million in the U.S. alone.

"The market for the standalone iStent Inject is 4x as large as the market for the iStent, potentially over $1 billion," Piros highlighted.

The analyst estimates that Glaukos could penetrate up to 30 percent of the market gradually over an eight-year period and assume the company will recognize about $1,000 per iStent device (and $1,200 for iStent Inject) after discounts and royalties.

In addition, Piros noted that Glaukos might be a more attractive target for a company already focusing on or wanting to enter the $5 billion glaucoma market due to its three-year track record and an extensive pipeline.

"Two of Glaukos' followers, with devices still under development, were acquired for upfront payments of $300+ million (plus milestones) during the last nine months," Piros elaborated.

The analyst recalled the acquisitions of Transcend and AqueSys by Alcon and Allergan, Plc Ordinary Shares AGN, respectively.

Piros estimates 2016 earnings of $0.04 a share on revenue of $100.1 million.

Shares of Glaukos closed Thursday's regular trading session at $24.69.