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What happened

After JP Morgan cut its rating on the stock ahead of third-quarter earnings being released after the bell, Intersect ENT (NASDAQ:XENT) shares are losing 43% of their value at 12:30 p.m. EDT Wednesday.

So what

JP Morgan has cut Intersect ENT from overweight to neutral Wednesday morning, and reduced its price target to $16 from $25.

Intersect-ENT markets the steroid-releasing implants Propel and Propel mini, which are used to improve outcomes for chronic sinusitis patients undergoing sinus surgery, and industry watchers are estimating that Wednesday afternoon's earnings report will include sales of $17.8 million and a loss per share of $0.27.

Now what

Earlier this year, investors were concerned that turnover in sales personnel was limiting top-line growth, and exiting Q2 management said it expects results will be on the low end of its prior $78 million to $80 million guidance. Clearly, JP Morgan isn't holding out hope that the company will deliver an upside surprise when it reports third-quarter results.

While Intersect ENT is stumbling on JP Morgan's downgrade, it may be worth tuning into its conference call later Wednesday to see if there may be an opportunity to buy shares on sale. Despite concerns, sales did grow 27% year over year last quarter, gross margin improved, and the company appears to have enough cash to keep the lights on for a while.

Assuming its pipeline opportunities pan out, sales march forward, and the company offers a clear line of sight to profit, then this could be an intriguing company to bargain hunt.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.