Thermage (THRM), a provider of noninvasive, tissue-tightening cosmetic treatments, has zigzagged since its initial trading on Nov. 9 at 7 a share; it is now at 7.66. But some pros expect the stock will soar when Thermage's next-generation ThermaCool system is launched. CEO Stephen Fanning won't say exactly when the new version will come out, but he insists it will let cosmetic physicians do treatments much faster and more efficiently. With an O.K. from the Food & Drug Administration, ThermaCool, sold in 70 countries, uses a radio frequency (RF) generator that, through special tips, heats and shrinks collagen--tightening the epidermis and subcutaneous tissue--while cooling the skin's surface. The tips deliver the RF energy, cool the skin surface, and monitor skin temperature. Katherine Owen of Merrill Lynch (MER), who rates Thermage a "buy," with a price target of 12, in a report describes the stock as a "pure play investment in the noninvasive aesthetic market." Keay Nakae of C.E. Unterberg Towbin, also with a "buy," says the technology penetrates more deeply than laser and is better suited for other uses, such as body shaping and contouring. One treatment lasts two to three years, he says.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial