Zeltiq Aesthetics

ZLTQ : NASDAQ : US$22.09
BUY
Target: US$26.00

 

COMPANY DESCRIPTION:
Zeltiq is focused on developing and commercializing
products utilizing its proprietary controlled-cooling
technology platform. CoolSculpting, the company’s first
commercial product, targets and eliminates stubborn fat
pockets through a proprietary process called cryolipolysis

Life Sciences — Biomedical Devices and Services
Q4/13 PRELIM CRUSHED IT;
INVESTING TO DRIVE UTILIZATION;
REITERATE BUY, PT TO $26
Investment recommendation
We are reiterating our BUY rating post pre-release of very robust Q4/13
results and preliminary 2014 guidance of top-line growth of 15%-20%.
We believe Zeltiq is well positioned to continue robust growth with a
new applicator (CoolSmooth) and significantly expanded practice
support assets being put in place. We note that Y/Y comparisons will not
become materially more challenging until the 2H/14. Lastly, we believe
an improvement in disposable utilization could drive upside to current
guidance and our updated expectations.
Investment highlights
Q4/13 pre-announce of $35-$36M in revenues was well above
our/Street estimates of $30.8M/$30.2M.
2014 sales guidance of 15%-20% is reasonable in our opinion and
leaves room for upside with increased utilization.
A doubling of the disposable sales force in Q1/14 and a new
applicator in Q2/14 should bolster utilization rates and sales.
Valuation
We are raising our price target to $26.00 from $22.00. Our valuation is
based on a 5.8x EV/sales multiple applied to our 2015E sales estimate of
$152.1M. Our price target assumes $55.9M in cash, no debt, and 36.2M
shares outstanding

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