HCW starts Alphatec at buy

H.C. Wainwright initiated coverage of Alphatec Holdings (NASDAQ:ATEC) with a “buy” rating and $4 price target, calling the company a “turnaround story in a high growth market.” The stock closed at $1.68 on August 11.

Alphatec is an orthopedic surgical products company focused on the fast growing spine market. Over the last four years, the company suffered significant loss of market share due to a failed merger, unfavorable litigation, and slipups by the previous management team, writes analyst Swayampakula Ramakanth.

Under a new management team, the company has reduced its debt burden, revamped its distributor relationships, and reintroduced biologic products, he added.

“We believe these forward-looking actions have helped Alphatec stabilize revenues, and we expect the company to grow sales to $174-million in 2024 from $104-million in 2017, a seven-year CAGR of 8%,” Mr. Ramakanth said.

With Alphatec now trading at a forward enterprise value-to-sales multiple of 0.5 times, compared with the industry average of 2.4 times, “we believe that the stock is oversold,” he added.

In addition, he said management invested 13% of the $18.9-million raised in a March 2017 stock offering, signalling their commitment in Alphatec’s growth. “In our view, Alphatec is now at an attractive buy for long-term investors looking for value with growth potential.”


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