Piper starts Apollo Endosurgery at overweight; PT $8

Apollo Endosurgery

Piper Jaffray launched coverage of Apollo Endosurgery (NASDAQ:LAPEN) with an “overweight” rating and $8 price target. The stock closed at $5.85 on April 12.

Apollo is focused on bariatric and general surgery procedures. The business is the combination of several assets that have been brought together over the past few years by the current management team.

“Although the company has faced some headwinds and there is one lingering (its Lap-Band business, which will likely continue to contract), we believe the company has turned the corner from a revenue perspective as a number of key new products should lead to accelerating growth,” writes analyst Matt O’Brien.

“With the stock trading at a meaningful discount to its peers, we recommend risk-tolerant investors start positions in the name at these levels,” he added.

Shares of Apollo have been volatile in recent months, with the stock down 55% in the past year, but up 4% year-to-date. “Given our view that the base business is stabilizing and the company is in front of a meaningful new product cycle (led by Orbera 365 and OverStitch Sx), along with a modest valuation, we believe the stock is primed to move higher,” Mr. O’Brien said.

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