Tuesday, December 05, 2006

Calls of Note Part 6

- Raymond James notes that while Natus Medical (NASDAQ:BABY) has had a nice run over the past five months, they continue to be buyers at current levels. They feel fundamentals are strong, remain comfortable with their estimates, and feel the potential for Cool-Cap approval should drive the stock in the near-term.

While the timing of FDA approval is always difficult to predict, the firm is hopeful that Natus could receive FDA approval for its Cool-Cap product in the near-term and view this announcement as a catalyst for the stock. Natus acquired Olympic Medical on October 16 and intimated in its conference call that it expected approval within a few months. While they do not anticipate changing estimates on the approval, the firm feels the announcement would create investor interest and give additional comfort in near-term estimates. They feel this product
could offer upside to 2007 revenue forecast.

The product helps prevent brain injury in newborns with birth asphyxia (oxygen deprivation) by cooling the body temperature, which slows the infant's metabolism and prevents a cycle of further apoptosis (cell death). This programmed cell death often causes brain damage. RayJay believe the U.S. market for the Cool-Cap is $65+ million. They assume a similar size market outside the U.S.

Maintains Outperform.

Notablecalls: Soleil-Belmont Harbor Capital's Daniel Owczarski called it nicely in June (see archives) saying the stock should be trading at a minimum in the $15 to $18 range. Think this baby has room to move higher.

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