OvaScience Inc (NASDAQ:OVAS) just reported second-quarter earnings, but for JMP Securities analyst Michael King, the true assessment of OVAS as an investing opportunity lies with Augment, an assisted reproductive technology which complements the existing standard of practice for an in vitro fertilization cycle. While OvaScience currently exists as a development-stage biotech company, King chooses to gauge clinical progress by evaluating OVAS lead technology, AUGMENT’s marketing success instead of prioritizing earnings. In reaction to a shortfall in AUGMENT cycles, the analyst reiterates a Neutral rating.

Though King finds solid market opening in Japan’s IVF market, the analyst remains “on the sidelines” for the firm. As King explains, “While we applaud the company for fulfilling its expectation of engagement in the Japanese market, we have limited expectations with respect to the performance of OVAS shares in the near term. Due to the shortfall in the previous expectation of 1,000 AUGMENT treatment cycles for FY15, we await further evidence for a turn in commercial adoption of the AUGMENT procedure before becoming more constructive on the shares.”

In its second quarter, OvaScience reported a net loss of $18.57MM at $0.62 per share, just under King’s projections of $20.6MM at a loss of $0.76 per share. Research and development costs rose to $5.99MM, over King’s estimate of $4.67MM, as a consequence of new hires. SG&A expenses were under King’s estimate of $14.57MM for the quarter, reaching $11.21MM for the quarter. Meanwhile, as a result of a $53.90MM capital raise in June, cash flow by the close of the quarter was $147.7MM. As the company continues to grow throughout 2016, OvaScience forecasts that R&D and SG&A expenses will also follow suit, with research expansion and investment opportunities in infrastructure during this building process.

According to TipRanks, two-star analyst Michael King is ranked #2,251 out of 4,101 analysts. King has a 49% success rate and earns 0.6% in his average returns.

TipRanks analytics shows OVAS as a Sell. Of the 3 analysts who have offered recommendations for OVAS in the last 3 months, 2 maintain a Hold and 1 issues a Sell. The 12-month average price target is $6.00, marking an almost 5% downside from where the stock is currently trading.

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