VASC : NASDAQ : US$23.50
BUY
Target: US$28.50
COMPANY DESCRIPTION:
Vascular Solutions manufactures and markets high-margin
products addressing the needs of the cardiac catheterization lab
as well as the IR suite. The company went public in 2000 as a
single product, vascular closure company. Over the last three
years, Vascular Solutions has broadened its product offering with
such devices as the D-Stat Dry hemostatic bandage, the Pronto
thrombus extraction catheter, GuideLiner catheter and the Vari-
Lase laser.
All amounts in US$ unless otherwise noted.
Life Sciences — Biomedical Devices and Services
PERFECT 10 (YRS OF GROWTH);
TARGET TO $28.50; BUY
Investment recommendation
VASC finished off the year in great form and reported fourth quarter
results that zoomed past expectations. In fact, 2013 marked the 10th
consecutive year of double-digit revenue growth, and management
provided 2014 guidance that suggests a continuation of this impressive
record. We think valuation of VASC common does not reflect this track
record, as the Street may either be ignoring or under-appreciating the
strength and consistency of VASC’s revenue, margin and EPS growth
track record. We recommend investors accumulate shares, as we think
the VASC story will have more of both “steak & sizzle” in 2014, noting
the potential of a new reprocessing service (not yet finalized, nor in our
estimates) that is anticipated to launch by year-end. We think this new
reprocessing service has the potential to become a meaningful
contributor to a franchise that should continue to generate strong
organic growth and operating margin expansion. In sum, we see
materially more upside for the stock.
We reiterate our BUY rating on shares of VASC and increase our price
target to $28.50 from $25.00 (target derived from relative comparison to
small-cap comp group on both EV/Sales & P/E bases).
Investment highlights
Q4 sales grew 15% Y/Y to $29.1M, above the top-end of its guidance
range and our $28.7M estimate and the Street’s $28.6M.
Pro-forma EPS (excluding litigation settlement cost), came in
at $0.22, above our/consensus projection of $0.19.Vascular solutions,
