Daily Roundup / Given Imaging Tumbles on Bitter PillCam

The company announces its pioneering camera-in-a-capsule won't be replacing invasive colon endoscopic procedures after all; SodaStream trounces forecasts.

Given Imaging forgoing colon camera for masses: Given Imaging stock tumbled 17% on the Tel Aviv Stock Exchange on Wednesday after the company admitted that its pioneering camera-in-a-capsule won't be replacing invasive colon endoscopic procedures after all. Given Imaging had been trading at a market cap of nearly half a billion dollars thanks to fond expectations that the PillCam Colon, developed to investigate the source of bleeding, would mostly replace inaccurate occult-blood tests (blood in stool) and painful, annoying colonoscopies. The PillCam technique involves swallowing an admittedly not-exactly-tiny capsule containing a video camera that passes painlessly through the digestive tract, snapping pictures as it goes along. No pain, but evidently not enough gain either: The PillCam Colon just doesn't work as well as traditional, horrible colonoscopies – or so it would seem based on the company's decision to pull back from obtaining blanket approval for its use. So, to investors' chagrin, Given Imaging advised the U.S. Food and Drug Administration that it won't be seeking broad approval for its technology to replace colonoscopies, but will seek the nod to have its capsule used when colonoscopy is impossible, or, if the patient balks at having a tube with a camera jammed up his rear.

Analysts slash Given Imaging targets: Analyst Stephen Tepper over at Harel was unconvinced by the prospect of Given Imaging's colon camera being "The Answer" for those cringing at colonoscopy. On Wednesday, after the company's revelation, he cut his 12-month price target for Given Imaging stock from $24 to $16. And that's still a 25% upside compared with the company's closing share price in Tel Aviv. Tepper estimates that the potential market for the PillCam Colon has suddenly shrunk by 65%. There are also those question marks over how well it works. (Note that none of this applies to the company's well-accepted PillCam for the small bowel and esophagus). Tepper also notes no growth in the PillCam Small Bowel Capsule Endoscopy in the company's reports. Moving onto Oppenheimer, its analyst Sergey Vastchenok cut its target from $24 to $18, based on a multiple of 15 times estimated earnings in 2013.

Kardan buys back bonds: From December 2011, real-estate investment company Kardan NV has bought back NIS 490 million worth of bonds, on which it will be recording capital gains of about NIS 220 million. Kardan NV is now the proud owner of half the Series B1 bonds it issued, and 13% of Series B2. By buying back its bonds, the company retired NIS 705 million in liabilities.

EZchip dives on lowered guidance: Shares of EZchip tumbled 25% in Tel Aviv on Wednesday after the company, which like Given Imaging is based on Yokneam, lowered its guidance on future earnings. The second-quarter results that the company delivered yesterday beat the consensus on Wall Street but investors were horrified to hear that third-quarter figures are looking weak. EZchip, which designs chips for routers, reported that its market share grew in the second quarter but said that a lot of clients are in stages, and will take time to ramp up to production.

SodaStream trounces forecast: Then there's SodaStream International, which yet again beat expectations for the quarter. Second-quarter revenues grew 50% year over year to $103 million, said the company, which makes machines to make your own soda at home. Adjusted profit (which in English means, not including onetime items that can skew the figures) grew nearly 40% against the corresponding period of the year before to $10.9 million, the company said. During the quarter, SodaStream sold 764,000 of these home-carbonation machines, up 20% from the corresponding quarter the year before. The company jacked up its revenues projection for 2012 by a cool $20 million to $405 million.

With reporting by Yoram Gabison and Lior Zeno

Soda machines
Given Imaging sales
Ariel Jerozolimski/Bloomberg