Zacks senior medical technology analyst Greg Aurand, CFA is taking a wait-and-see attitude on shares of stent-maker Xtent (XTNT). To understand this decision better, we turned to his most recent report:

The company's second-quarter loss beat our loss estimate by a penny on a higher share count. We believe the Biosensors risk is increasing without any information provided so far in 2007. At present, assuming intact timelines, we estimate the company could capture roughly 5% of the worldwide DES [drug eluting stent] market in 2011 with full year profitability.

Given the timeline and trial data risks in the story, we believe the stock is fairly valued at 40x our 2011 EPS [earnings per share] estimate of $1.32, discounted 45%, or approximately $10.25. We maintain a Hold rating.

Since we do not expect any commercial revenues until second half 2008 (2010 in the U.S.), we believe the stock will be driven in the near term by several clinical and regulatory events that confirm the clinical and commercial potential of the Custom NX system. However, the company is reliant on Biosensors for regulatory approval of the stent coating. Any trial or product approval delays, unforeseen product safety problems, adverse clinical study data or competition could affect our outlook. We believe the Biosensors risk is increasing without any information provided so far in 2007.