CE Unterburg upgraded Cytyc (CYTC) to long-term buy from long-term market perform. On Monday, the company announced plans to buy Novacept.
Analyst Al Kildani tells S&P MarketScope that Novacept's sales of its NovaSure System for treating excessive menstrual bleeding grew from $8 million in 2002 to $38 million in 2003. He notes competitive advantages in procedure time and ease of use. He says management expects Novacept to add $45 million to $50 million in revenue for three quarters in 2004, and $85 million to $90 million in 2005.
He says the acquisition establishes Cytyc as a women's healthcare franchise, and beyond a pure clinical diagnostics company. Sees Novacept helping Cytyc return to 20% to 25% EPS growth.
Kildani sees EPS of 74 cents in 2004 and 85 cents in 2005. He sets a $21 to $23 price target on the stock.