Sunshine's Short Squeeze Play Warms Bullish Investors
LOS ANGELES, CA -- (Marketwire) -- 02/06/13 -- Shares of Sunshine
Heart Inc (NASDAQ: SSH) hit a high of $6.99 and closed the day +
7.24% at $6.81 + 0.46 on Tuesday after we first told our premium
readers that shares showed potential as both a speculative trade and
short squeeze candidate. Both points still hold true a day later.
Days ago, Piper Jaffray's senior analyst Thomas J. Gunderson
initiated coverage of Sunshine Heart Inc (NASDAQ: SSH) with a
$10/share price target, letting clients know that the firm was
anticipating shares to outperform relative to the median of the group
of stocks covered by the analyst.
"SSH has developed a type of ventricular assist device (VAD) that is
designed to enhance the efficiency of the heart for patients
suffering from heart failure. We view SSH as having passed a number
of development and regulatory hurdles including IDE approval for a
pivotal trial in the US for ultimate FDA approval," wrote Gunderson
in his report.
The Piper Jaffrays report indicates: "We are intrigued with SSH's
C-Pulse(TM) device given the device's minimally invasive approach to
enhancing the heart's pumping action, while implanted outside of the
blood stream. This approach avoids complications with stroke or
thrombus which have emerged with traditional VADs, and represents a
key clinical benefit. An additional benefit relates to up front and
total cost of treatment, with an anticipated ~$60K ASP relative to
LVADs which are priced at $100K+, shorter hospitalization times, and
a lower incidence of re-hospitalization post-implant."
"According to the American Heart Association there are 5.1 million
Americans suffering from CHF. Clinical literature puts the proportion
of NYHA Class III heart failure at ~20% of that number or roughly
~1.0M potential patients. Assuming a 10-20% applicability hurdle for
potential implants, based on comorbidities, cost/reimbursement, and a
$60K ASP, we project a $6-$12 billion addressable market for
After faltering a bit in mid-January -- thanks to now "verified as
false" street rumors that the firm would do a major dilutive
financing -- SSH shares had begun to bounce back steadily on
relatively low volume. Quietly over the past few sessions, shares
have regained momentum to the upside and could go higher as the
shorts who had sparked short interest in the stock rise 20% without
any other catalyst, continue to cover.
There is chatter and speculation on Wall Street among some bankers
that the company has caught the attention of industry giant,
Medtronic, Inc. whose market cap is nearly $47B.
The takeover rumors were fueled on Monday, after the former Chair of
Medtronic's Corporate Research and Development Council, Mr. Warren S.
Watson, was suddenly inserted into the Board of Directors --
replacing Dr. William Peters, who gave no indication about his
departure, other than to say that the "resignation was not based on
any disagreement with the Company."
We continue to feel optimistic that shares, which currently trade
well off from their 52-Week highs of $22.90, may continue their climb
higher given the number of near-term catalysts -- including initial
patient enrollment in US and European clinical trials expected this
quarter (1Q13). We also note that additional clinical data should be
forthcoming from Sunshine Heart's 50 patient European post market
SSH continues to look like an attractive trade candidate as a
short-squeeze play and we like the potential growth outlook that is
well above the general medtech average.
Furthermore, given the strong bounce off support levels, we like he
play's risk-reward ratio for higher upside from current levels.
Technically speaking, there are a number of indicators that catch our
attention as we look at the most recent stock chart.
To learn more about Sunshine Heart's ground-breaking C-Pulse(R) Heart
Assist System, watch the videos about the implantable, non-blood
contacting, heart assist therapy on the firm's website.
This innovative device for the treatment of moderate to severe heart
failure can be implanted using a minimally invasive procedure and
hearing some of the patient testimonials provides insight and
The full version of this report complete with disclosures and
technical analysis of the trade can be found here:
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