TearLab's Co-Promotion With PRN A Positive, But Rodman & Renshaw Isn't Raising Its Estimates

TearLab Corp (NASDAQ: TEAR) announced on Thursday that it had inked a co-promotion agreement with Physician Recommended Nutriceuticals (PRN), a privately-held eye health company. Under the arrangement, the firms will join efforts to promote PRN’s omega-three formulations, including Dry Eye Omega Benefits®, which supplements the TearLab Osmolarity System, by reducing osmolarity levels in patients with dry eye disease (DED).

Following the announcement, Rodman & Renshaw analysts Raghuram Selvaraju and Yi Chen reiterated a Buy rating and $2.00 price target on shares of TearLab. As per a report issued Friday, the experts argued that the two companies mentioned above “share the corporate goal of helping doctors and patients manage DED and thus should generate synergies to accelerate the growth of DED products from both firms through co-promotion of a quantitative and objective diagnostic tool and a clinically-proven nutraceutical that improves DED biomarkers.”

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Having said this, the analysts decided not to raise their estimates for TearLab, as they see the agreement as part of a business strategy that was already accounted for in Rodman & Renshaw’s model. However, they added, the news should provide larger support for the management team’s 2016 revenue growth outlook of 13 to 18 percent.

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Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.