NEW YORK, Oct. 11, 2004 (PRIMEZONE) -- The following is an investment opinion issued by Investrend Research Syndicate:
Retractable Technologies Inc. (AMEX:RVP) has been downgraded from "Strong Buy / 5" to a "No Rating / 3" by Investrend Research analyst Ryan Fuhrmann, CFA, and its target valuation of $11 per share has been withdrawn.
Fuhrmann reported that Retractable had recently reported antitrust/anticompetitive lawsuit settlements with Becton Dickinson (NYSE:BDX) and Abbott Laboratories (NYSE:ABT), but at the same time had lost a sales channel through Abbott.
The report noted that Retractable had received $65.1 million pretax net from Becton Dickinson, increasing Q3 EPS by $2 per share. "Due to the settlement, anti-competitive conduct by hospital group purchasing organizations and dominant suppliers of needle syringes has become a thing of the past," Fuhrmann's report noted.
He pointed out that the company's 2Q saw decreased net sales by 3.2%, attributed to the loss of sales to Abbott Laboratories. But because of higher unit sales prices to Abbott, management said the loss was "recouped" by a decrease in marketing fees, and unit sales increased 9.8%. The cost of sales dropped 23.8%, leading to a 77.6% increase in gross profit.
The settlement greatly improves RVP's ability to enter new markets, allowing it to pursue additional sales avenues that were being unfairly blocked from exposure to Vanishpoint products. The settlement also provides the company with sufficient liquidity to pursue market expansion, paydown debt, pay common and preferred dividends, buyback stock, etc.
The withdrawal of the company's target valuation was due in part to the company's failure to provide access to the analyst in accordance with the issuer standards proposed by the joint panel of the CFA Institute and National Investor Relations Institute.
The complete report is at http://www.investrendresearch.com.
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