Sunday, August 31, 2014

Craig-Hallum starts TearLab at buy

March 5, 2012 by · Leave a Comment 

Craig-Hallum Capital has initiated coverage of TearLab (NASDAQ:TEAR; TSX:TLB) with a “buy” rating and 12-month price target of $5, calling the company a “unique diagnostics opportunity with ophthalmology.” The stock was changing hands at $2 Monday afternoon.

Analyst Steven Crowley writes that TearLab’s Osmolarity System offers optometrists and ophthalmologists a unique point-of-care diagnostic tool for fast, easy, and quantitative diagnosis and monitoring of Dry Eye Disease (DED).

It features “compelling economics for physicians, modest cost for payors, is FDA-approved and CLIA-waived, and recent developments have removed major obstacles to market access and reimbursement,” he added. “We believe TearLab is poised to drive widespread adoption of its novel razor/razorblade system, ultimately establishing the TearLab Osmolarity System as the standard-of-care for diagnosis of DED.”

Based on feedback from physicians, Mr. Crowley sees “this reality translating to a rapidly growing and very profitable entity of significant size in atypically short order.”

He figures that if only 10% of the U.S. patient population were tested and monitored annually, TearLab’s revenue from disposables alone would be $80 million, comprised of four million people times two eyes times $10 per test.

“With a clear path to 50%-plus gross margins, we believe that’s an equation likely to generate exceptional investment returns for a company with a market cap currently below $40 million,” he added.

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