Analyst’s Report Prompts Plunge in Firm’s Stock

Stock of CardioVascular Dynamics Inc. dropped 24% Monday in feverish trading after an analyst said delays in sales of new catheters and related products would leave the tiny Irvine biomedical company without a profit until the fourth quarter.

During the day, the stock fell to $7.50 a share--its lowest level since the company went public at $12 in June--then rallied to close at $9.50, off $3 per share. Trading volume on the Nasdaq totaled nearly 1.7 million shares, the highest level since the public offering.

“I’ve had better days,” sighed Dana Nickell, the company’s chief financial officer, after he and other officials took numerous calls from investors wondering what’s up.

A report by analyst Phillip Nalpone, which triggered the sell-off, noted that the company had postponed introducing a catheter line in the United States and a related line in Europe.

Nalpone, of Volpe, Welty & Co., lowered his projections for the company’s sales this year to $19.3 million from $30.1 million.

He also revised his earnings projections, estimating that the company will record a $1.1-million loss for 1997, compared with previous estimates of a $2.5-million profit. Nalpone now expects the company to report losses for the three quarters through September, and a modest $100,000 profit in the last quarter.

Nickell didn’t dispute Nalpone’s projections. However, he attributed the loss expected this year to a $1-million investment in research and development. On an operating basis, he noted, the company should break even.

Nalpone also estimated that the company will post a loss of $2.5 million on sales of $8.8 million for last year, compared with his previous forecast of a $2.4-million loss on $9.2 million in sales.

Nalpone reduced his “strong buy” recommendation on the stock to “buy.”

Observers say such disappointments are rampant throughout the ranks of biomedical companies that went public last year.

Robert Mescal, an analyst for a publication that tracks initial offerings, says slightly more than half of last year’s new issues were trading above their offering prices at the end of the year.