NEW YORK (TheStreet) -- Shares of Endologix (ELGX) - Get Endologix, Inc. Report were dropping 11.24% to $12.20 on heavy trading volume Wednesday morning after the company reported solid results for the 2016 second quarter, but indicated the approval of its Nellix device is more drawn out than previously anticipated.
Nellix is an investigational system designed for the treatment of infrarenal abdominal aortic aneurysm, which results in the abnormal widening of the aorta.
"The FDA has requested additional information related to our PMA submission and also indicated that we might need to go to an Advisory Committee Panel," the company said in a statement after yesterday's closing bell.
RBC Capital Markets downgraded the stock to "sector perform" from "outperform" and cut its price target to $12 from $17 this morning.
"The high likelihood of an FDA advisory panel, ahead of an FDA decision on Nellix, could push approval to 4Q:17. A 6-month news vacuum on the pathway to FDA approval removes a key catalyst for ELGX," the firm wrote in an analyst note.
Despite the delay, RBC remains upbeat on the commercial success of Nellix in the U.S. longer term.
For the 2016 second quarter, Endologix posted an adjusted loss of 13 cents per share, narrower than the loss of 20 cents per share analysts had expected. Revenue was $51 million for the quarter, above analysts' estimates of $46.3 million.
In 2016, the company sees an adjusted loss per share of 70 cents to 75 cents on revenue of $197 million to $203 million. Analysts are modeling a loss of 79 cents per share on revenue of $198.2 million.
Endologix is an Irvine, CA-based company that makes medical devices for the treatment of aortic disorders.
About 3.54 million of the company's shares changed hands so far today vs. its average volume of 1.04 million shares per day.
Separately, TheStreet Ratings Team has a "Sell" rating with a score of D on the stock.
The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally high debt management risk.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: ELGX