Spectranetics Target $ 30

SPNC : NASDAQ : US$22.88
Target: US$30.00

Spectranetics is a medical device company that develops, manufactures and markets the only FDA approved excimer laser system for the ablation of atherosclerotic plaque and thrombus in the coronary and peripheral vascular system. The company also sells a family of catheters used in the removal of leads from implantable pacemakers and defibrillators.

Life Sciences — Biomedical Devices and Services
Investment recommendation
We recommend adding to positions in SPNC. To wit, the company had
one more thing to be thankful for heading into Thanksgiving as CMS
released its finalized 2014 fee schedule late Wednesday that did not
include the payment cap on office-based lab (OBL) facility rates proposed
by the agency circa mid-2013. Ergo, 2014 reimbursement rates for
atherectomy procedures performed in OBLs will be virtually unchanged
from 2013 levels. Recall that SPNC shares were pressured mid-year
after publication of the proposed rule – in which CMS proposed a large
reimbursement cut to atherectomy procedures performed in the office
setting – even though our research at the time suggested the proposed
cuts were unlikely to have an impact on SPNC or general PAD market
growth. With reimbursement concerns in the rearview mirror for now,
we continue to believe SPNC will grow its VI revenue above market
rates. We reiterate our BUY rating and $30 price target.
Looking ahead, the next key catalyst for SPNC will be the FDA filing for ISR indication clearance, which we believe will occur within the next several weeks. We also believe data from the EXCITE ISR trial could be presented at ACC or EuroPCR in the spring. Lastly, we anticipate FDA approval in late Q2/14.
Investment highlights
 In light of the overwhelming objection to the proposed cuts to nonfacility rates, CMS will reconsider its proposal and plans to address this issue in future rulemaking.
 We now expect CMS reimbursement for atherectomy procedures performed in the OBL setting will be maintained around $11,900 for 2014


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