Biotech Beat: Analysts Bullish on Cytosorbents Corp (CTSO) and EnteroMedics Inc (ETRM) Following Earnings

Following third quarter earnings, analysts are bullish on immunotherapy company Cytosorbents Corp (NASDAQ:CTSO) and EnteroMedics Inc (NASDAQ:ETRM) thanks to the companies’ cutting edge treatments.

Cytosorbents Corp

Jonathan Aschoff of Brean Capital reiterated a Buy rating on CytoSorbents with a $25 price target after the biotechnology company posted third quarter earnings last week. The company posted revenue of $1.3 million and a loss per share of ($0.11), both in-line with expectations.

Aschoff highlights that sales increased 38% from the quarter prior despite currency headwinds. The analyst added, “Reorders drove the growth versus much penetration into new accounts, but we expect the growing salesforce to help bring that more into balance,” referring to new hires. The company is working with key opinion leaders, or KOLs, and doctors as it adds more sales representatives and a medical liaison to its ranks.

The analyst also points to distributor sales with the company’s partner, Fresenius Medical Care, in Europe. Aschoff explains, “The company targets a formal launch in four key countries in 1Q16, with a launch in the rest of the countries gradually unfolding in 2016.” Once completed, this market will cover more than 127 million people though CytoSorb, the company’s commercial therapy that aims to prevent organ failure. CytoSorb is not yet approved to be sold in the majority of these countries.

According to TipRanks, only 2 analysts have weighed in on CytoSorbents in the last 3 months and both are bullish on the stock. The average 12-month price target between these 2 analysts is $19, marking a 171% potential upside from where shares last closed.

CTSO Consensus

EnteroMedics Inc

Analyst Chris Lewis of Roth Capital maintained a Buy rating on EnteroMedics but lowered his price target from $1.25 to $0.75 after the company posted third quarter earnings last week. The company is known for the vBloc, its pacemaker-like device used to combat obesity. Lewis notes that only 4 people received the implant this quarter, falling short of his estimate of 8. Consequently, the company posted sales of $64k, missing his estimate of $120k.

Insurance reimbursement for obesity-fighting devices has not yet become commonplace. Lewis notes that the self-pay market is not as robust as he anticipated because “physicians and patients are more inclined to choose a bariatric surgical option that is already being reimbursed.” The analyst continues, “As a result, the company has shifted efforts away from the self-pay market and increased focus on obtaining reimbursement through the prior authorization process.” The analyst stresses that they key to the company’s success lies in its ability to obtain reimbursement authorizations.

Overall, Lewis comments, “While ETRM’s early commercial metrics around certified centers and trained physicians remain encouraging, in our view, we expect ETRM’s commercial traction over the next 12-18 months to be limited until more widespread reimbursement is established.”

According to TipRanks, one other analyst has released a bullish rating on EnteroMedics in the last 3 months. The average 12-month price target for the stock is $2.50, marking a 1,566% upside from where shares last closed.

ETRM Consensus



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