Wells Fargo Upgrades Sientra After FDA, Financing Concerns Ease

Shares of Sientra Inc SIEN have declined about 25 percent since the company reported its first-quarter results on May 8.

Meanwhile, the industry backdrop has improved and the near-term financing overhang on Sientra's stock has lifted with the company announcing it raised gross proceeds of $100 million in an upsized equity offering of around 17.4 million shares, according to Wells Fargo.

The Analyst

Wells Fargo’s David Maris upgraded Sientra to Outperform and raised the price target from $8 to $10.

The Thesis

Sientra’s shares came under pressure on concerns around the then-upcoming FDA panel meeting on breast implant safety and a financing overhang, Maris said in the note.

Both these concerns have been mitigated.

The FDA panel called for additional monitoring and reporting, which is a more favorable decision than an outright ban as many feared.

Maris added that, in April, the FDA approved several new styles of Sientra implants, including some textured implants, which indicate a ban may not happen. Moreover, the financing overhang has lifted with gross proceeds of $100 million being raised by the company.

Price Action

Shares of Sientra trader higher by more than 7.8 percent to $6.62 at the time of publication.