WR Hambrecht upgraded DJ Orthopedics (DJO ) to buy from hold, and set a $27.50 price target.
Analyst David Turkaly says the upgrade is based on an attractive valuation; high interest rate debt retirement (greater positive impact in 2005); new products gained in the Regentek acquisition; and products highlighted at the American Academy of Orthopedic Surgeons last week.
Turkaly says DJO recently raised $56.7 million in a secondary offering, which it will use to pay down high interest rate debt. He says the leverage associated with this pay-down led him to raise his $1.00 2004 EPS estimate to $1.03. He also initiated $274 million revenue and $1.31 EPS estimates for 2005.