Analyst: NxStage poised to tap $1 billion dialysis market

[okarol]

Analyst: NxStage poised to tap $1 billion dialysis market
June 8, 2011 by MassDevice staff

NxStage Medical is poised to drive double-digit annual sales growth as it boosts its 1 percent share of the dialysis market, according to Leerink Swann analyst Danielle Antalffy.


NxStage Medical Inc. (NSDQ:NXTM) is 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, according to a Wall Street analyst.

After meeting with the Lawrence, Mass.-based company's CEO Jeffrey Burbank and investor relations VP Kristen Sheppard last week, Leerink Swann's Danielle Antalffy wrote in a note to investors that NXTM stock is a smart buy these days.

"Our meetings reiterated our belief that the company's fundamental long-term growth story remains intact, and the recent selloff in NXTM shares presents an attractive entry point," Antalffy wrote, referring to the 26.7 percent nosedive the stock has suffered since NxStage announced its first-quarter earnings in early May. "Despite increasing investor anxiety driven largely by an ongoing customer contract renegotiation and a potentially more gradual adoption uptake post-bundle than some had hoped, NXTM seems poised to drive 15%-20% sales growth — at least — for the next few years."

With its System One home hemodialysis device in use by about 1 percent of U.S. dialysis patients, at least according to Burbank, NxStage could gain considerable market share over the next five years — as much as 15 percent, Burbank told Antalffy. The top could also benefit from further international expansion, an increasingly positive clinical data set and the twin factors of lagging competition and an improved reimbursement landscape.

Baxter International (NYSE:BAX) is on the cusp of launching a clinical trial for its home hemodialysis system, putting its entry into the market off by a few years, according to Burbank.

"NXTM's experience has been that it takes 2.5-3.0 years for a product to come to market once the company initiates a clinical trial," Antalffy wrote. "Mr. Burbank also seemed confident that NXTM is developing a product that will be 'sufficiently better' than the competition."

Investors spooked by the ongoing customer contract renegotiation, "with whom we suspect is Fresenius," Antalffy noted, should be comforted by Burbank's assertion that such dealings are par for the course and that this one is "going as expected."

"And, based on our recent physician conversations — including those at FMS centers — it seems unlikely to us that these negotiations will be significantly incrementally more negative for NXTM," Antalffy added.

Despite beating The Street's expectations and posting record first-quarter revenues, NXTM 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.

http://www.massdevice.com/news/analyst-nxstage-poised-tap-1-billion-dialysis-market

[HouseOfDialysis]

Maybe my impending buy of NXTM stock could profit enough to pay my Medicare premiums.

[lmunchkin]

Go NxStage!  Now if they could get contracts with clinics that vow to hold down "the clinics" cost of the patients using this awesome little machine.  The clinics are going to price this product out of business if not careful.  Hire a CEO with "Pair" to put a stop to this nonsense!  Please!!!!!!!

lmunchkin     

[plugger]

I endorse this stock!  Now you can say Schwab is behind this company.  (Don't tell anybody it is Chris recommending it - not Charles)

Chris

[greg10]

Guy, I know you are not pumping this stock, but don't confuse customer loyalty with market reality.  Even though we are a customer of NxStage, we would refrain from buying this stock at this point.

The history of 10 to 20 "bagger" (10 to 20x increased in price) of technology stocks has generally not been pretty.  The charts below are based on Kase bars which is a kind of range bar chart where the time component has been removed from the chart.  On the right you see the entire history of Yahoo which made a 10 bagger in less than a year, a 20 bagger in about 18 months and then lost it all in the subsequent years.  On the left is NxStage, a ten bagger in 20 months.  How NxStage will perform will all depend on any technological lead it has and how it adapts to the changing market and government regulations.  I have no inside information, but I find it unlikely that NxStage will have any proprietary technology that other bigger companies such as Fresenius, Baxter or even Davita can't duplicate.  There is also the threat of newer technology and advances in transplantation immunology and stem cell research that can turn this business upside down overnight.  I think all these factors make NxStage a risky investment.

This doesn't mean you can't make money off of it in the short term.  The stock made a bounce off the Fibonacci 38.2% retracement and may now test the $21.17 level, but it is more likely to test the 50% retrace at $14.54 level in the coming months.  Is it going to be a 20 bagger?  Well, see if it can break and sustain the highs reached on 1/19/11 of $27.10.  Yahoo was able to do that in 12/1999 but that was the peak of the internet bubble and it was all down hill for Yahoo after January of 2000 (that tremendous move from a 10 bagger to 20 bagger for Yahoo occurred in the time of about one month, a sign of the blow off top in a bubble).

I endorse this stock!  Now you can say Schwab is behind this company.  (Don't tell anybody it is Chris recommending it - not Charles)
Chris

Maybe my impending buy of NXTM stock could profit enough to pay my Medicare premiums.

[plugger]

Guy, I know you are not pumping this stock, but don't confuse customer loyalty with market reality.
 

Nah, wasn't pumping the stock - just goofing around.  From what I've heard over the years NxStage seems to be putting out a fine product, but I couldn't tell you what it is like stock-wise: over-valued, undervalued - don't know.

I wondering though if they ever came out with a slow nocturnal machine?

[lmunchkin]

Plugger, since we're not telling anyone anything, this NxStage though not heard from me, can be slowed down to nocturnal almost.

Greg, NxStage will probably be arounnd alot longer, cause this stem cell (Even if your own Stems) is going to be made for the wealthy only, IMO! But if you invest in it just don't put all your eggs in one basket.  The secret to investing is Diversifie, right?  I may not be the brightest branch on this tree, but I was raised to live within my means and to save for a rainy day.  Unfortunately, I never made that much to save, but if I did, I would invest in Mutual Funds with diversification.

lmunchkin     

[plugger]

 NxStage though not heard from me, can be slowed down to nocturnal almost.

Your secret is safe with me!