Zltq

Source: Zetliq Aesthetics. 

Slimming down remains a challenge for a lot of people, and that's been an opportunity for Zeltiq Aesthetics (NASDAQ:ZLTQ). The company behind the CoolSculpting platform has been growing quickly as cosmetic surgeons, dietitians, and dermatologists stock up on the machine that freezes off fat cells.

CoolSculpting's results aren't as immediate or dramatic as liposuction, but the procedure costs a lot less and it doesn't require the surgical downtime of liposuction. 

There's clearly a market for CoolSculpting. More than two-thirds of adults in the U.S. are overweight, and a third of all Americans are obese. We will get an update on how Zeltiq is doing when it reports third-quarter results on Tuesday afternoon. Let's go over a few of the things for investors to watch.

1. Keep guidance moving in the right direction
Zeltiq has had a wild stint as a publicly traded company. It went public at $13 in 2011, but slow growth through 2012 -- revenue inched just 12% higher -- found the stock trading below $4 early last year when it initiated its guidance for a 10% top-line move for 2013.

It didn't play out that way. The stock has been a six-bagger since then on the strength of its improving performance-backed optimism. Wider adoption of its machines and the growing popularity of its procedure found CoolSculpting revenue guidance for 2013 doubling to 20% during the summer last year. Three months later, its top-line guidance doubled again to 40%. Zeltiq's revenue eventually soared 47% in 2014, and the upward revisions continue.

Guidance for 2014's revenue has gone from $134 million-$137 million in February to a range of $137 million-$140 million two months later. Three months after that Zeltiq boosted its revenue outlook to between $160 million-$165 million. 

That brings us to Tuesday afternoon when Zeltiq can keep its impressive streak of higher outlooks coming. 

2. Surprise Mr. Market with a profit
Zeltiq came through with its first profitable quarter during the second quarter, chiming in with earnings of $0.07 a share. Analysts were holding out for a loss of $0.13 a share. Analysts are at it again. They see a deficit of $0.08 a share.

Wall Street gets the growth. Analysts see revenue soaring 37% to $40.2 million. They're just not convinced that it has turned the corner to be consistently profitable despite closing out its previous quarter with an installed base of 2,562 CoolSculpting machines.  

Another quarter of breaking through the profit ceiling could change that. 

3. Expand the market
The FDA cleared CoolSculpting to treat flanks (love handles) in this country in 2010. It followed that up with getting the green light to tackle abdomens. The FDA cleared CoolSculpting's use on thighs this summer.

Growing its range of procedures is important, giving potential customers more options for future treatments. These machines are already being put to good use. The 2,562 CoolSculpting systems delivered 166,116 revenue cycles during the second quarter, and that figure likely expanded during the third quarter. 

There is also a great opportunity to continue to expand its international reach. Zeltiq's international revenue has more than doubled through the first half of the year, but it still only made up 23% of the total revenue mix.

Zeltiq may not have a lot to say on the potential of broadening CoolSculpting's treatment applications, but it should continue to post heady international growth. A little perspective here would be welcome in assessing Zeltiq's ceiling. 

 

Rick Munarriz owns shares of Zeltiq Aesthetics. The Motley Fool recommends Zeltiq Aesthetics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.