LeMaitre Vascular

LeMaitre Vascular markets devices used to treat
peripheral vascular disease (PVD) in either a surgical or
endovascular setting. Open vascular surgery products
comprise ~71% of sales, with endovascular and general
surgery accounting for 21% and 7%, respectively.
LeMaitre has over 65 direct sales reps and also uses
distributors. The company has a diversified product
portfolio with 16 product lines, none of which is more
than 20% of sales.

All amounts in US$ unless otherwise noted.

Life Sciences — Biomedical Devices and Services

The company’s prospects look very attractive to us
given the confluence of material cost-cutting initiatives, manufacturing
consolidation (both of which have been executed) and new, upcoming
product launches/approvals could drive significant gross and operating
leverage as 2014 progresses. In fact, we see a relatively clear pathway to
double-digit operating margins by Q4. Coupled with the company’s solid
execution of its strategy to build strong market share positions through a
diversified product offering, we would be buyers of LMAT. We maintain
our BUY rating and $11.50 price target.
We update our model to account for the completion of the company’s
secondary offering. We believe the offering provides LMAT with sufficient
cash to fund its commercial and product development activities, along
with the ability to augment its growth profile via tuck-in acquisitions,
opportunity for which should be abundant in a relatively fragmented
vascular device market.

Investment highlights

Our $11.50 price target is based on our small-cap medical device group, which carries a
median EV/Sales of 2.7x (ex. hi/low). Applying a 15% discount to this group multiple, we
apply a 2.3x EV/sales multiple on our 2015 revenue estimate of $75.8M.



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