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MAY 24, 2004
By Gene G. Marcial ANSI: Killing The Pain?  Advanced Neuromodulation Systems (ANSI
) is in the business of managing chronic pain, but its stock was itself a source of heartache for many when it tumbled from 47 in February to 27 by May 12. Its product is an implantable pulse generator system that stimulates the spinal chord to treat intractable chronic pain. The entry of another company -- Advanced Bionics -- into pain control provoked selling of ANSI's stock. But to Peggy Farley, CEO of Ascent Capital Management, which owns shares, the sharp fall is a rare buying opportunity, as ANSI's business is ramping up. And ANSI could be a buyout target of Johnson & Johnson (JNJ
) which, Farley says, is looking at ANSI to broaden its stake in the neuromodulation market dominated by Medtronic (MDT
). Neuromodulation is the delivery of electrical stimulation to nerve fibers to ease pain. ANSI's 2003 earnings vaulted 97.7% to $13.2 million, or 64 cents a share, and sales leaped 59%, to a record $91.1 million. Farley figures ANSI will earn 90 cents a share in 2004 and $1.25 in 2005 -- both above consensus estimates. She says clinicians are assessing the potential of neuromodulation in treating other ailments, such as depression, obesity, Alzheimer's disease, and chronic headaches. Even without a buyout, Farley says, ANSI could double in 12 months. David Turkaly of investment firm WR Hambrecht says competition is inevitable, but he adds that ANSI is well equipped in technology and products to compete ably over the long term. Johnson & Johnson declined comment.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.  See Gene on Fridays at 1:20 p.m. EST on CNNfn's The Money Gang.
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