Further Growth Projected At LabStyle Innovations

Rodman & Renshaw maintains its Buy rating and $12 price target on LabStyle Innovations Corp (NASDAQ: DRIO) after the company's better-than-expected first-quarter results.

LabStyle Innovations reported lower-than-projected net loss of $0.33 per share versus the brokerage's estimate of $0.38 per share. Revenues of $568,000 were also slightly above the brokerage's projection of $556,000.

As a result, the brokerage has narrowed its 2016 loss per share estimate to $1.50 from $1.53.

LabStyle would benefit from the uptake of its Dario Smart Meter, according to Rodman & Renshaw. LabStyle launched the Dario Diabetes Management Solution in the United States late in the first quarter of 2016, and has begun online sales in the United States, along with a social media marketing campaign.

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"In our view, if the company is able to successfully broaden its revenue mix into software and database access sales, our projections from both a top-and bottom-line standpoint could turn out to be extremely conservative," analyst Raghuram Selvaraju wrote in a note.

"Based on sales projected in type 1 diabetes (only 5 percent of the total diabetes population), we believe that LabStyle could generate peak annual Dario product sales (based only on test strips) of roughly $90 million," Selvaraju elaborated.

"We note that the software and database access revenue streams are likely to be significantly higher-margin than sales of the test strips," Selvaraju added.

At the time of writing, shares of LabStyle were down 0.91 percent to $4.86.