Echo Therapeutics Upped to Hold - Analyst Blog

On May 13, Zacks Investment Research upgraded Echo Therapeutics, Inc. ECTE to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell).

Why the Upgrade?

With the release of its financial results on May 9, Echo Therapeutics reported yet another quarter of narrower loss per share. Loss per share of 23 cents in the 2014-first quarter compared favorably with the year-ago quarter's loss of $1.30. The quarter also clocked a positive earnings surprise of 11.5%.

For 2014, two estimates moved up in the past 7 days, with no downward revision. The upward revisions led to a 10.2% rise in the Zacks Consensus Estimate to stand at a loss of 88 cents per share.

Though Echo Therapeutics witnessed a 15.3% decline in revenues for the last reported quarter, operating and net losses incurred were significantly lower than last year due to substantial cost reduction measures implemented by the company in Sep 2013.

Total operating expenses more than halved to $2.7 million from $5.5 million in the first quarter of 2013. Research and development expenses dropped substantially by 64.3% to $1.1 million, while selling, general and administrative expenses slid 33.1% to $1.5 million on the back of decreased personnel and other related costs.

Echo Therapeutics also revealed an improvement in its financial position as deferred revenues decreased to $133.7 thousand at the end of the quarter from $152.9 thousand as of Dec 31, 2013.

Going forward, Echo Therapeutics remains optimistic with regard to the market potential for its Gen 2 Symphony CGM System. The company continues to focus on securing the CE Mark and the subsequent launch of Symphony in Europe as well as the initiation of the FDA pivotal trial next year.

Moreover, the long-term expected earnings growth for Echo Therapeutics is pegged much higher at 40.0% compared with the industry growth of 17.1%.  

Other Stocks to Consider

Some better-ranked stocks in the medical instruments industry include RTI Surgical Inc. RTIX, Accuray Incorporated ARAY and Globus Medical, Inc. GMED. While RTI Surgical sports a Zacks Rank #1 (Strong Buy), both Accuray and Globus Medical hold a Zacks Rank #2 (Buy).