Standard & Poor's Equity Research
Citigroup upgraded Cynosure (CYNO
) to buy from hold, noting that share prices have fallen in spite of the company's strong business fundamentals.
Analyst Matthew Dodds says the risks related to implications of ongoing IP litigation between two laser competitors appear overstated. He notes that Cynosure shares have fallen 13% since the company posted very solid first quarter results in early May, and are down 30% year to date. He says that while Cynosure's comparable group has also pulled back, Cynosure has fallen more, making it undervalued in his view. Meanwhile, he says the underlying fundamentals remain robust. He keeps his 50 cents 2006 earnings per share (EPS) and 80 cents EPS 2007 estimates, although he cuts his price target by $1 to $21.