Piper Jaffray Comments On Cyberonics; Raises PT To $38

Cyberonics CYBX results from Piper Jaffray's proprietary physician survey gives it additional confidence in new patient growth estimates for VNS Therapy within the U.S. market. It continues to believe that a combination of new patient growth in the US, the new market opportunity in Japan, and the new product pipeline will contribute to strong top-line growth. With increased confidence in new patient growth and visibility, Piper is raising its estimates and moving to a CY12 valuation. Not all patients receive significant benefit from VNS implants. Piper Jaffray's surveys revealed physicians' belief that many patients are reluctant to accept a surgical implant without a better sense of a positive outcome. In some ways this is similar to ICD or CRT-D issues, but with a more device naïve physician base. While CYBX can work on better efficacy, the more likely opportunity will be in better dissemination of current efficacy, and possibly more marketing to the epilepsy community. Piper's revised price target moves to $38 and it reiterates an Overweight rating. CYBX closed Friday at $32.30