Watching Cyberonics (CYBX)
evolve over the years has been pretty compelling. I was part of a
sell-side research team that covered the stock in the late 90s and early
00s and followed the company as it struggled to gain the acceptance of
the FDA, physicians, and patients, not to mention overcome a
particularly aggressive CEO. In more recent years, the company has
settled into a solid growth trajectory driven by incremental market
penetration and a very strong replacement cycle, while delivering
impressive margins.
The question is what comes next. While I do
believe the company's core addressable market in developed countries
(epilepsy) remains significantly under-penetrated, I don't see that
changing rapidly or dramatically. That puts even more significance on
the under-developed opportunity in depression, where the company has
only a limited opportunity to drive real change. Although these shares
aren't all that expensive relative to other growth med-techs on the
basis of multiples, it's going to take either accelerated penetration in
epilepsy or upside in depression to drive a higher intrinsic fair
value.
Continue here:
Depression Likely The Biggest Incremental Driver For Cyberonics
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