Investment bank Roth Capital Partners upgraded shares of AtriCure Inc. (NSDQ:ATRC) to “Buy” and raised its target price by nearly 30 percent.
AtriCure, a cardiac surgical device maker, will enter “a new phase” during the next two years in which its growth rate will improve, according to a new report from two Roth analysts. That’s due to several factors, including an expansion of its U.S. sales territories, further adoption of its surgical products and a continued increase in international sales.
Roth raised its target price on AtriCure’s shares to $13.50 from $10.50. In late-morning trading, AtriCure’s shares were up more than 3 percent to $10.59. Roth had previously rated AtriCure’s stock as “Neutral.”
Roth also sees growth potential in AtriCure due to several milestones the West Chester, Ohio-based company looks to accomplish. One is simply increasing sales of its AtriClip device, which is a clip used during heart surgery to exclude the left atrial appendage. The device has “the potential to become a stand-alone franchise targeting a $150 million opportunity,” the report said. It’s used to help protect atrial fibrillation patients from strokes. The AtriClip received U.S. regulatory clearance for sales last year.
A recently started clinical trial that involves a “hybrid” approach to treating persistent atrial fibrillation patients also holds promise for AtriCure, Roth said. The procedure being evaluated in the study combines AtriCure’s minimally invasive surgical ablation devices with a catheter-based ablation system from BioSense Webster. The study, called DEEP AF, has “the potential to validate a new treatment technique for an [atrial fibrillation] population that remains ostensibly underserved today,” according to the report.
Other promising signs for AtriCure — and its investors — come from two recent acquisitions of cardiac device companies. Medtronic Inc. (NYSE:MDT) acquired ATS Medical Inc. for $370 million in April, and St. Jude Medical Inc. (NYSE:STJ) bought AGA Medical for $1.3 billion in October.
“The two acquisitions in the space leave AtriCure with an implied market value substantially higher than today’s levels,” Roth said.
Could AtriCure be the next cardiac device maker to be scooped up by one of the big players? It’s likely that possibility sent investors scurrying to buy the company’s shares Tuesday morning — and the report from Roth didn’t hurt either.
