Laser Leader

Good Morning.

Today’s featured stock is BIOLASE, Inc. (NASDAQ – BIOL - $5.15).  The Company provides innovative solutions in laser technology for dentistry and general medicine.  Its Waterlase systems are used for cutting tissue matter, and its diode laser system is used in soft tissue, pain therapy, and cosmetic procedures, like teeth whitening.

  BIOL has specialized dental laser systems that permit dentists, periodontists, endodontists, oral surgeons, and other specialists to perform a range of dental procedures, including cosmetic and complex surgical applications.  The Diolase 10 Diode is a specialty product that is used for a variety of pain relief applications.

Why do we think the stock will continue the ride it has had from early February, up over 100%?

First, BIOLASE continues to create and innovate.  The Company was granted two patents within a few days apart last week.  Its non-contact laser piece should offer a competitive edge since it is designed to emit high-density uniform laser beam from a non-contact laser hand piece that is replaceable and can be configured to optimal distances and focal spot sizes.  Also, the FDA cleared Biolase’s EPIC 10S soft tissue diode.  The laser has been cleared in 19 markets and 80 different indications including plastic surgery, oral surgery, orthopedics, dermatology, podiatry, gynecology, cardiac surgery, urology, thoracic surgery, vascular surgery, aesthetics, ophthalmology, general surgery, and ear, nose and throat among others. Additionally, this product is also cleared by the FDA for temporary pain relief and tooth whitening.

Additionally, BIOL continues to find new revenue streams.  Last week, it entered into an agreement with Lambda S.p.A., in which Lambda will pay BIOLASE royalties on past and future sales that utilize the ErYAG (erbium-doped yttrium aluminum garnet) laser technology.  The Company also expanded its offerings into CAD/CAM (Computer Aided Design/Computer Aided Manufacturing). 

BIOL clobbered the earning expectations for 4Q12 earnings, reporting $0.05 EPS versus the $0.00 expectation, and $19 million in revenue versus the $18 million estimate.  2013 revenue estimates are expected to be right around the $70 million mark, nearly a 23% increase from 2012.

Add in some very bullish short term charts and BIOL is set to jump to the $6.50 level sometime in this quarter.

Have a great day!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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