Image source: Zeltiq Aesthetics.  

Zeltiq Aesthetics (ZLTQ) hit another all-time high last week, and one analyst thinks that the company behind the CoolSculpting machines that freeze away fat cells is heading even higher. Stifel analyst Jonathan Block is boosting his price target on the stock from $38 to $52. He is sticking with his buy rating.  

The move makes sense on the surface. The stock has closed above $38 for eight consecutive trading days now. It's hard to cling to a bullish rating with a price target that is below where the stock is at these days. Block is justifying his revision based on improving margins and profitability.

Zeltiq generates revenue from the initial sale of machines and accessories, but it also cashes in on higher-margin consumable revenue whenever the machine is put into use. It's a segment that's growing a lot faster than system revenue, up 54% over the past year relative to a 23% increase in system revenue. Consumable revenue is now accounting for 56% of Zeltiq's total revenue, but Block sees recurring revenue growing to 70% of sales by 2018.   

Cool places

Year-over-year revenue growth decelerated to 25% during this year's first quarter, Zeltiq's slowest growth in three years. The CoolSculpting parent went on to bounce back in the second quarter with its top line soaring 39%, its headiest growth in more than a year.

There are now 5,254 CoolSculpting systems in its installed base, and they are being put to good use. There have now been nearly 3 million CoolSculpting sessions performed with 370,122 of them coming during its latest quarter alone. High customer satisfaction rates for the non-invasive procedure are encouraging dermatologists, physicians, and weight loss center operators to consider the purchase. 

Zeltiq has made a smart investment seem even smarter by gaining clearance for treatment in new body areas. It has also rolled out add-on applicators that speed up the process, allowing treatment centers to go through more appointments. 

The one dark cloud this year has been shrinking margins. New products and heavier marketing expenses have weighed on bottom-line results, but Stifel's Block sees a sharp improvement in margins next year. 

Zeltiq is doing right by Wall Street. The company keeps boosting its top-line guidance with every passing quarter. This makes it easy for analysts to warm up to the growth stock, especially those Wall Street pros that see the near-term bottom-line challenges as being a mere temporary setback. Investors will want to naturally keep an eye on the revenue cycles for any signs of a slowdown in popularity, but for now CoolSculpting as a treatment and Zeltiq Aesthetics as a stock keep moving in the right direction.