Syneron Medical bogged down with slumping sales for ultrasound fat-zapping device

Jeff Nardoci, president of Syneron's North America Body Shaping Group

Israel's Syneron Medical ($ELOS) charged into 2015 with big plans for growth. But the company is hitting a few speedbumps, bogged down by management changes and less-than-stellar sales for its flagship fat-zapping device.

The Yokneam Illit-based company recently scaled back its 2015 revenue projections for its ultrasound cellulite-busting product, UltraShape, to $16 million from $20 million, citing "internal management challenges," Bloomberg reports. The news sent stock down 20% to $6, the lowest it's been since 2009.

Part of the problem has to do with changes at the top. Syneron appointed a new CEO in early 2014 after chairman and founder Shimon Eckhouse stepped down, and the company recently switched things up again by hiring Jeff Nardoci as the president of its North America Body Shaping Group to oversee sales, marketing and training doctors to use UltraShape.

"The Syneron story over the last few years has generally been a story of disappointment with management," Griffin Securities analyst Zack Ajzenman told Bloomberg. "We've seen a couple CEO changes and we've seen sales force restructuring--so there's been a lot of skepticism."

But Narodci doesn't seem daunted by the company's recent missteps. "You have these changes all the time when you're first starting up business units and getting them running," he said, as quoted by Bloomberg. "We've got a great product, it's just how do you get everything to work in harmony."

Another factor weighing on the company is increased competition with Zeltiq Aesthetics ($ZLTQ), as the companies vie for a share in body contouring market forecast to grow to $2 billion by 2017. Nardoci told the news outlet Syneron should stop pitting itself against its rival, but the comparisons seem to draw themselves. Analysts see sales for Zeltiq's CoolSculpting technology, which freezes fat cells, jumping 44% to $252 million this year and profit more than tripling to $5.4 million. Syneron's sales will grow 7% to $274 million and profit will slide 18% to $6.5 million, according to the Street's predictions.

Still, Syneron has regained some momentum since its stock tumble last month. The company is now trading at about 20 times 12-month future earnings, Bloomberg points out, and analysts expect the shares to rise 60% in the next 12 months to $12.10. "The amount of selloff was greater than what the actual bad news was," Leerink analyst Richard Newitter told the news outlet, but that "doesn't mean that the company still doesn't have a lot of investor credibility to regain."

- read the Bloomberg story