For SonoSight, a Strong Pulse

By Mara Der Hovanesian

SonoSight (SONO ) is going places in miniaturized ultrasound. Its handheld digital devices are used in cardiology and for vascular imaging. At about $25,000 a pop, its main product, weighing just 6 pounds, is a big improvement on $100,000, 300-pound behemoths. Spun off from ATL Ultrasound (now part of Philips), SonoSight has installed 7,000 systems worldwide since its September, 1999, launch.

Like other medical tech companies, SonoSight has seen its stock crushed. From a January high of 28, it has fallen to 16. One reason: new rivalry. General Electric is rumored to have its own ultrasound sensor. "You don't discount competition from GE," says analyst Bruce Jacobs of Deutsche Bank. "But it validates the market opportunity." Jacobs says that while GE's technology is still a mystery, he believes SonoSight will "sustain its leadership position." His 12-month target is $30.

Charles Olsziewski of UBS Warburg rates SonoSight a "strong buy" and has a target of $26. UBS Warburg was lead underwriter of a secondary offering--at $17.25 a share--which raised $42.5 million earlier this month. CEO Kevin Goodwin says the cash will help launch new products and an overseas sales force. With the nod of regulators, two new models will appear in 12 months, including a 3-pound iLook system. In office physical exams, doctors can use the iLook like a souped-up stethoscope for on-the-spot diagnoses. SonoSight revenues hit $12.8 million in the first quarter of 2002, up 57% from 2001. Olsziewski sees fourth-quarter profits of 11 cents a share, and 40 cents in 2003.

Corrections and Clarifications In Inside Wall Street (June 3), the name of the company featured in the second item was misspelled. The headline should read: "For SonoSite, a strong pulse." The company's ticker symbol, SONO, was correct.

Gene G. Marcial is on vacation.

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