Kinetic Concepts 4Q In-Line With Pre-Announcement, Piper Jaffray Raises PT To $46

Piper Jaffray has published a research report on Kinetic Concepts, Inc. KCI after the company reported earnings that were in-line with the pre-announcement Kinetic Concepts published in January. In the report, Piper Jaffray writes "Results were in line with KCI's pre-release in early January, but guidance came in on the conservative end of expectations, slightly below current estimates, as management frames out 2011 as a year of investment and transition. As a reminder, North American Active Healing Solutions (AHS) and Regenerative Medicine showed sequential improvements over Q3, partially offset by weaker than expected TSS performance (beds and surfaces). Management reviewed its new products and geographic expansion plans, offsetting share losses and pricing pressure in developed markets, but there were few details regarding KCI's VAC royalty expense, which is widely anticipated to be significantly reduced. Although timing is uncertain, we estimate that termination of the Wake Forest VAC royalty could theoretically add around $1 to earnings and potentially around $5 to the stock. We remain Underweight on KCI, as we expect the stock to underperform our coverage universe over the next 12 months." Piper Jaffray maintains its Underweight rating and has raised the price target from $43 to $46. Kinetic Concepts closed yesterday at $45.80.