Analyst’s Report Prompts Plunge in Firm’s Stock

IRVINE â€”  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.