Oscar Gruss & Sons has downgraded its recommendation for Given Imaging Ltd. (Nasdaq: GIVN; TASE: GIVN) from "Hold" to "Reduce" and cut its target price to $13 from $16. The investment house also lowered its forecasts for the company.
Oscar Gruss analyst Ziv Tal said that he was worried that the delay by the French health authoritiein approving reimbursement for use of the Pillcam SB (small bowel) s would probably affect Given Imaging’s annual results. He added, "We believe that delay in approval for Pillcam SB nationwide reimbursement in France coupled with muted growth in the US may hinder results for the second half of 2008."
Tal noted that Given Imaging's management had previously said it expected to obtain a monetary code for the PillCam SB in France by June, which would boost the number of people covered by the procedure in Europe by 60 million to 219 million. He believes that the company included French reimbursement in its 2008 guidance. He also predicts that the approval may double Given Imaging's sales in France during the fourth quarter of 2008. He therefore expects that delays in French approval will have a negative impact on Given Imaging's earnings. A further factor is the "secondary deceleration in the company's business in the US as evidenced in the past three quarters."
Oscar Gruss lowered its 2008 revenue forecast for Given Imaging to $128.2 million from $131.9 million and cut its earnings per share forecast to $0.40 from $0.46.
Given Imaging fell 2.1% on Nasdaq to $14.78 yesterday, and fell 1.1% in morning trading on the TASE today.
Published by Globes [online], Israel business news - www.globes-online.com - on July 23, 2008
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