Alphatec: Finally Recovering From Its IPO

Apr.16.07 | About: Alphatec Holdings, (ATEC)

On April 16, The Wall Street Transcript interviewed Brian Wong Vice President and Senior Analyst at First Albany Capital Inc., covering medical technology. Key excerpts, with his sector pick, follow:

TWST: Please give us an overview of what you are covering in the orthopedic space.

Mr. Wong: I am covering Alphatec (NASDAQ:ATEC), BioMimetic (NASDAQ:BMTI), DJO Inc. (DJO), Exactech (NASDAQ:EXAC), Integra LifeSciences (NASDAQ:IART), Stryker (NYSE:SYK), Orthovita (Pending:VITA), Wright Medical (NASDAQ:WMGI) and Zimmer Holdings (ZMH).

TWST: The first name you mentioned was Alphatec. What is the outlook for them for the next couple of years?

Mr. Wong: Alphatec stumbled a little bit out of the gate with its IPO. The bar has been reset to a more achievable level and as long as it continues to execute on its business plan, I think it'll be okay.

TWST: What was the problem with the IPO?

Mr. Wong: There was some turnover in the company's sales force. Management changed their sales strategy a little bit too quickly out of the gate, and I think that caused the hiccup. But now it has an experienced team in place that knows what to do, and it should be poised for some solid growth in the quarter.

TWST: Did they recruit experienced people to fill in?

Mr. Wong: Yes. Currently their Chief Operating Officer, Ross Simmonds, is the veteran of the spine industry.

TWST: What kind of growth are they capable of generating?

Mr. Wong: That is also in the 10% plus area on the top line.

TWST: Where is Alphatec at this point? What is your target on that one?

Mr. Wong: Alphatec is trading around $4.25. We have a $7 price target on that, based on a 2.8 times multiple of our 2007 revenue estimate of $83.1 million.

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