March 9 (Bloomberg) -- Zeltiq Aesthetics Inc., maker of a treatment for fat cell removal, surged the most since October after an analyst at Canaccord Genuity Corp. initiating coverage of the company recommended buying the stock.
Zeltiq rose as much as 17 percent after Canaccord analyst William Plovanic released his report. The shares of the Pleasanton, California-based company gained 15 percent to $6.53 at 2:17 p.m. New York time. The stock had fallen 50 percent this year before today.
Plovanic set a 12-month price target of $10 a share.
“I think you need to look at the overall growth this company has put up,” Plovanic said in a telephone interview. “The revenues have tripled on a quarterly basis in the last 12 months. In the quarter they just put up, they grew 52 percent year to year on a quarterly basis.”
Zeltiq fell 34 percent March 6 after forecasting 2012 revenue of $90 million to $94 million, less than a consensus estimate of $113.9 million in its first full-quarter earnings report after an initial public offering in October. Canaccord was an underwriter of the IPO.
On March 7, Zeltiq declined 12 percent after being cut to a rating of neutral from overweight by JPMorgan Chase & Co. and downgraded to neutral from buy at Goldman Sachs Group Inc.
In setting his buy rating, Plovanic cited a Zeltiq procedure called “CoolSculpting,” approved by the U.S. Food and Drug Administration in September 2010. The technique has given Zeltiq “significant market traction,” Plovanic said.
“This is one of those instances where you have disappointed investors near term but you have a good technology that’s been very well received and a large, untapped opportunity in front of them,” he said.
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To contact the editor responsible for this story: Reg Gale in New York at Rgale5@bloomberg.net