Cyberonics, Inc. (CYBX) reported Q3 EPS that beat our estimate by $0.05 on sales that also exceeded our forecast. We again increased our FY08 EPS estimate. We lowered our FY09 revenue estimate.
CYBX continues to progress in its new strategic priorities. A restructuring of the lease on its corporate headquarters in Q3 is expected to result in additional cost savings. The company revealed more details on its depression strategy.
At its current price of $12.37 per share, CYBX is trading at 2.4x our fiscal year 2009 revenue estimate of $137 million, which is at a discount to the group average multiple of roughly 3x. The company's growth expectation has been reduced from the unsuccessful attempt at gaining national reimbursement coverage for the depression indication. The audit committee completed its internal review and concluded that the accounting for certain stock option grants to employees, officers, and directors during certain periods was incorrect.
The company has restated most or all of its consolidated financial statements for these periods. The audit committee's conclusions resulted in the resignations of CYBX's CEO and CFO. The company recently appointed Daniel J. Moore as President and CEO and Gregory H. Browne as CFO. In addition to reduced growth, the stock is also under pressure from the going concern qualification. At roughly 2.7x our 2009 revenue estimate, our price target remains at $13.50.
Read the full analyst report on CYBX.
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