Though Avinger Inc (NASDAQ:AVGR) and Moneygram International Inc (NASDAQ:MGI) investors are out cheering and sending the stocks on a clear rise, analysts from Oppenheimer and William Blair approach the companies from a more wary perspective. One analyst cuts the price target on Avinger taking into account a pre-announcement miss that preceded solid trial data whereas another analyst takes a conservative step to the sidelines amid M&A news.
Let’s dive in:
Avinger: Price Target Cut Despite Successful VISION Data
Avinger shares jumped almost 35% on the heels of the healthcare company posting encouraging VISION data from its two-year trial for its Lumivascular technology, evaluating both safety and effectiveness of its Pantheris atherectomy device. The results revealed 82% of sustained freedom from target lesion revascularization (TLR) as well as exhibited steady durability compared to 86% at the one year marker.
From the eyes of Oppenheimer analyst Steven Lichtman, the pivotal data read-out is a positive one, but he additionally lowers his model estimates when considering a more disappointing fourth-quarter pre-announcement released at the start of January.
“Recall sales of ~$4.7M were below our $5.6M est., driven by lower disposable revenue that missed due to lower Pantheris utilization. The 4Q16 results/lower utilization were disappointing and we are lowering our estimates for lower near-term utilization, but we believe continued solid clinical data from Pantheris such as reported yesterday remain encouraging for its longerterm ramp. Next-generation Pantheris and a below-the-knee device should also both help drive utilization higher,” Lichtman contends, spotlighting potential upside for medium or long-term prospects.
Therefore, the analyst reiterates an Outperform rating on shares of AVGR while reducing the price target from $8 to $5, which represents a 61% increase from current levels.
At the close of the fourth quarter, AVGR had $36.1 million in cash, a reflection of $11.0 million of fourth-quarter cash burn, compared to the analyst’s $11.8 million projection, as well as $3.8 million in net proceeds from its at-the-market (ATM) program. Additionally, AVGR has unused capacity remaining on its ATM facility circling $45 million.
Lichtman cuts his 2016 sales forecast from $20 million to $19 million following the pre-announcement while pulling back 2017 sales estimates from $31 million to $25 million due to declining disposable revenues.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Steven Lichtman is ranked #4,016 out of 4,378 analysts. Lichtman has a 54% success rate and faces a loss of 2.8% in his yearly returns. When suggesting AVGR, Lichtman forfeits 49.2% in average profits on the stock.
TipRanks analytics demonstrate AVGR as a Buy. Based on 2 analysts polled by TipRanks in the last 3 months, both are bullish on Avinger stock. With a return potential of 61%, the stock’s consensus target price stands at $5.00.
Moneygram: Moving to the Sidelines
Moneygram shares climbed almost 9% after the announcement surfaced yesterday that upon receiving regulatory approval, Ant Financial Services will be acquiring the company in an $880 million deal, or $13.25 per share, expected to close in the second half of this year.
Though William Blair analyst Robert Napoli is “not bothered by the modest premium” of 11.5%, considering the shares have seen a 100% plus rise in these four months, on back of the acquisition, he downgrades from Outperform to a Market Perform rating on MGI without listing a price target.
While the analyst takes a more cautious approach, MGI’s board of directors and key shareholders definitively agreed to the transaction, which represents 46% of outstanding voting shares.
Napoli notes, “Ant expects to maintain the MoneyGram brand and its existing management team and will maintain its headquarters in the United States. Further, the press release suggests Ant Financial will grow its U.S. workforce. The nearly $600 billion global money remittance market is highly fragmented, with the largest providers being Western Union […] at about 15% global share and MoneyGram with about 5% share. We believe these factors may help ease the regulatory hurdles. We believe that the regulatory approvals may not be a given in this deal.”
Moreover, the analyst opines, “In addition to Western Union, we believe Ant’s entrance into the United States could have competitive implications for PayPal,” indicating a positive perspective amid the new sidelined stance.
Overall, “We have been encouraged by MoneyGram’s recent management change and its new focus on agent productivity, profitability, cash flow and growing the omnichannel business (online, self-service),” Napoli concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Robert Napoli is ranked #893 out of 4,378 analysts. Napoli has a 57% success rate and gains 8.1% in his yearly returns. However, when recommending MGI, Napoli loses 30.7% in average profits on the stock.
Additionally, Michael Tarkan of Compass Point rates a Hold rating on MGI with an $8 price target, Tien Tsin Huang of J.P. Morgan rates a Hold with an $8 price target, and Sara Gubins of Merrill Lynch rates a Sell with a $6 price target.
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