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Analysts bullish on TearLab results

March 23, 2012 by · Leave a Comment 

Covering analysts gave TearLab Corporation (NASDAQ:TEAR; TSX:TLB) high marks after the company reported fourth quarter results yesterday and provided optimistic commentary around its expected ramp in system placements in the second half this year.

Matt Dolan of ROTH Capital Partners has raised it price target on TearLab to $4 from $3, saying “we are becoming increasingly confident that the company will be able to meet and possibly exceed our projections.”

Steven Crowley of Craig-Hallum Capital Group said that “given the substantial value creation formula which is rapidly taking shape at TearLab, we encourage investors to get onboard before it becomes better reflected by a much higher stock price.” He reiterated his “buy” recommendation and $5 stock price target.

TearLab shares were changing hands at $2.96 on Friday morning.

Mr. Dolan’s forecast is based on full realization of two TearLab milestones achieved earlier this year: CLIA-waiver from the FDA and a national Medicare reimbursement rate for its osmolarity device to diagnose dry eye disease from a patient’s tear film.

TearLab has 304 osmolarity testing devices in clinical use within the U.S and 402 devices in the rest of the world. The company said there has been more than  40 new agreements signed in first quarter this year, with 200 more prospects in its sales pipeline.

“We see these placement rates as an early indication of increased card revenue, particularly beginning in third quarter of 2012,” Mr. Dolan said.

Mr. Crowley said a very positive early response to the new CLIA-waived TearLab system “supports our belief that it is uniquely poised to address a large and underserved market for quantitative diagnosis of dry eye disease at the point-of-care.”

Mr. Dolan said that going forward, “we continue to gain confidence that TearLab will meet and possibly exceed our current modeled projections through a number of  catalysts, including the benefit of the CLIA-waiver as it becomes fully integrated in CMS reimbursement system in the second half this year; further positive coverage decisions of private payer insurance (currently 70% of  privately insured patients are  being reimbursed); and increased adoption by physicians as tear osmolarity becomes more accepted in evaluating dry eye disease,” he added.

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