Analyst expects strong demand for Cerus systems

NEW YORK -- A Cowen and Co. analyst said Monday that Cerus Corp., which makes devices that are used to clean donated blood, should report strong revenue growth as sales of its Intercept system increase.

THE OPINION: Analyst Josh Jennings began covering the company's stock with an "Outperform" rating. Jennings said the company's revenue should rise by about 20 percent a year through 2015, and after that, Cerus should win an important new approval for its Intercept system.

"We believe the proprietary Cerus Intercept pathogen inactivation system will become the gold standard for blood transfusion safety globally," he wrote.

The Intercept system is designed to clean bacteria, viruses, and parasites out of donated blood platelets. It markets Intercept for use in donated blood platelets and plasma in Europe, the Commonwealth of Independent States, and some other markets. The Concord, Calif., company is developing a new version of Intercept that cleans red blood cells.

Jennings said that is a much larger market: he estimated the worldwide market for cleaning transfused red blood cells could be worth $4.7 billion a year for Cerus and its competitors, almost triple the value of the blood platelet and plasma markets combined. Jennings said he thinks European Union regulators will approve the Intercept red blood cell system in 2015, with U.S. approval to follow in 2017.

Cerus reported $18 million in revenue in the first half of 2012 and expects $34 million to $36 million for the full year.

THE STOCK: Shares of Cerus gained 7 cents, or 2.1 percent, to $3.43 in afternoon trading. The stock more than doubled in value from October 2011 to March 2012, but has lost 26 percent of its value since reaching a 52-week high on March 20.