AG Edwards cut Cyberonics (CYBX ) to sell.
Analyst Jan David Wald says the company's growth prospects were predicated upon approval of a VNS device for depression, and the FDA's rejection is a large blow. He says the FDA found that some depression patients were worse off utilizing the device than before.
Wald thinks the FDA didn't want to set a precedent for devices with questionable statistics and data, and therefore rejected it. He believes this setback could push Cyberonics back until 2008 for FDA approval, provided it continues with the device.
Wald sees a 73-cent fiscal 2005 (Apr.) loss.