
NxStage Medical, Inc. (NASDAQ:NXTM) got some more good news out of Wall Street, as investment bank JP Morgan Chase & Co upgraded shares of the Lawrence, Mass.-based dialysis maker.
The ratings upgrade, which comes on the heels of a similarly upbeat note from I-bank Leerink Swann on Wednesday, is good news for a company that has seen its stock pummeled on The Street over the past month. Shares of NXTM stock, which closed at $17.85 on June 9, have dropped by 27 percent since the company reported its first quarter earnings in May. NxStage’s stock is off more than 32 percent from a high water mark of $26.37 in late January.
In a note to investors, JP Morgan said it was upgrading NXTM shares from neutral to overweight with a target price of $26 per share. The bank based its upgrade on its internal surveys that suggest a 30 percent growth in the home hemodialysis market and the “potential for clarification of the Medicare home reimbursement process in the next 24 months (and possibly as early as this summer), improving access.”
In addition, the investment bank said that investor “concerns that a key customer [Fresenius Medical Care Holdings Inc. (NYSE:FMS] is restricting the number of patients it will support on home hemodialysis” have been overdone.
The bullish rating had a positive effect on The Street, as shares of NXTM are up 2.4 percent in early morning trading.
On June 8, Leerink Swann’s Danielle Antalffy said that the company was poised to take a $1 billion bite out of the dialysis market as it drives its share from 1 percent of dialysis patients into double-digit range.
The latest roller coaster ride for NXTM shares began in early May, when despite beating The Street’s expectations and posting record first-quarter revenues, NxStage shares dived nearly 14 percent the day it released its Q1 numbers.
NxStage reported losses of $6.0 million on sales of $50.6 million during the three months ended March 31. That compares with net earnings of $9.0 million, or 19 cents per diluted share, on sales of $40.4 million during the same period last year.
The top-line boost was attributed to sales of the in-home version of the company’s System One hemodialysis system, which increased almost 37 percent from $19.0 million in 2010 to $26.0 million in 2011, and the Total System One, which had a sales increase of more than 33 percent from $25.1 million to $33.5 million.