Roth Capital Reaffirms EnteroMedics at Buy; Positive Bias Heading Into The FDA Panel


In a research note issued today, Roth Capital reiterated coverage with a “Buy” rating on EnteroMedics Inc. (ETRM), and a price target of $3.00 a share.

Roth’s analyst Chris Lewis believes that EnteroMedics offers a less invasive and safer, yet effective, treatment for the large and under-treated obese population, which could leave the company well-positioned for potential U.S. regulatory success.

As a reminder, the U.S. Food and Drug Administration (FDA) has set June 17, 2014, to discuss Enteromedics’ Maestro System approvability at the FDA’s Center for Devices and Radiologic Health’s Gastroenterology-Urology Advisory Committee.

While FDA panel votes are difficult to predict, Roth Capital views EnteroMedics’ risk-reward as positive and believe a positive recommendation would have major strategic implications for the company and quickly be priced into the stock. Alternatively, if the panel goes against ETRM, an immediate negative reaction is expected in the stock on the headline, but would acknowledge remaining intrinsic value related to the company’s technology, IP portfolio, and international commercial opportunity.

According to TipRanks, which measures analysts and bloggers success rate based on how their calls perform, analyst Chris Lewis, who covers EnteroMedics, has a one-year average return of -3.5% and a 33% success rate.

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