AirXpanders Inc

AXP Details
· de novo clearance for AeroForm® Tissue Expander System from US FDA: The stock of AirXpanders Inc (ASX: AXP), a medical device company, made an outstanding rally of about 13.3% on December 22, 2016 as the company received U.S. Food and Drug Administration (FDA) de novo clearance for its AeroForm® Tissue Expander System. With this approval, the group is now targeting US$800 million of total addressable market opportunity from the US. Management is confident that they would be able to position their AeroForm well in the US, given the rising U.S. mastectomy rates and growing number of women undergoing breast reconstruction. Accordingly, the group is strengthening their U.S. sales force by hiring direct sales team and started initial targeted market release in the U.S., by adopting a similar path that they used for Australia. The group also filed a traditional 510(k) application for better design that has been incorporated in the latest version of the CE-marked AeroForm, as it will be sold in Australia. The results of this FDA clearance will be released in second quarter of FY17.

· Recommendation: The shares of AirXpanders generated over 26.4% in the last six months but corrected over 19% in the last three months (as of December 21, 2016). A cautious approach in terms of investment may be taken in view of the emerging tissue expansion market. We believe the stock is “Expensive” at the current price of – $ 1.27

PMP Ltd

PMP Details 
· ACCC concerns over proposed merger with IPMG: PMP Ltd (ASX: PMP) stock lost over 11.2% on December 22, 2016 as the Australian Competition and Consumer Commission (ACCC) expressed their initial concerns pertaining to PMP and IPMG merger. ACCC reported that the merger of PMP and IPMG may decrease the competition among major suppliers in the market. Moreover, ACCC sees a heatset web offset printing market even though the circulation for magazines and the volume of catalogues is falling.

· Recommendation: PMP stock generated strong returns of about 29.8% in the last three months (as of December 21, 2016). The stock is currently trading at an unreasonable P/E. Concerns over the proposed merger with IPMG might continue to persist. We give an “Expensive” recommendation on the stock at the current price of - $ 0.71

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