Solta Medical (SLTM) is a small $3 a share medical device maker based in California. It popped on my radar screen this morning as it reported earnings and revenues that beat estimates, which seems to be a rarity this quarter. Upon further investigation it looks like an intriguing play for aggressive growth investors.
Key highlights from SLTM's earnings report:
- Revenue rose 28% Y/Y to $35mm, around $1mm above consensus estimates.
- Growth from both its North American and overseas businesses were both between 27% to 28% Y/Y as well providing two engines of growing revenue flows.
- Treatment tips and consumables (recurring revenue streams) came in at 48% of total revenues.
- The Company reiterated that revenue for the full year 2012 is expected to be in the range of $142 million to $144 million, representing year-over-year revenue growth of 22% to 24%.
- Earnings after adjustments was 3 cents a share to the black, 6 cents better than the 3 cent a share loss expected by analysts.
Solta Medical designs and manufactures energy-based medical device systems for aesthetic applications.
4 additional reasons SLTM is a good speculative play at $3 a share:
- The median price target held by the 8 analysts that cover the stock is just over $4.50, implying 50% possible upside from the current stock price.
- The company has averaged better than 18% annual revenue growth over the past five years and that sales growth appears to be accelerating this year.
- Although the company has posted losses in net income over the past few years as it ramped up production and sales, it has been operating cash flow positive for the past twelve months. The company is expected to post a profit of 12 cents a share in FY2013 (which I expect to rise after this earnings report).
- Insiders hold approximately a third of the overall stock and there has been no insider selling for over 6 months.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SLTM over the next 72 hours.
