BioLase Bloodied on Forecast

Biolase (BLTI Quote) is bleeding again.

The California maker of dental lasers surprised Wall Street Wednesday by predicting a first-quarter loss on revenue of $15 million. Analysts surveyed by Thomson Financial were looking for a penny-a-share profit on sales of $18 million.

The company blamed the big shortfall on an overly busy sales force, focused on a key distribution arrangement with Henry Schein (HSIC Quote), and insisted that it has lost no ground in the highly competitive dental laser field.

Shares of Biolase, which had been approaching a 52-week high ahead of the report, plummeted 23% to $7.86 on the news.

Bulls were no doubt startled. Just last month, Needham analyst Dalton Chandler reiterated his buy rating and $12 price target on Biolase's stock after the company reported its first profitable quarter in years. Chandler was, in fact, bullish on the stock even before the company hit that milestone. His firm plans to secure investment banking business from the company in the future.

Like many, Chandler felt that October's third-quarter results -- which brought sales growth in the crucial domestic market and hinted at looming profits -- signaled brighter days ahead. Back then, the company's stock jumped 20% on those hopes.

"We thought the rally might have been even stronger," Chandler wrote at the time. "We think this may be due to lingering questions about the Schein relationship that will probably only be answered by another quarter or two of strong domestic revenue growth."