While few people may want to admit it, but more and more cosmetic surgery and treatments are being done every year. While non-surgical procedures like botox treatments are huge, so are surgical treatments, like breast augmentation. A new report from Jefferies highlights some breakthrough stocks that could be exposed to markets with sales potential in the billions.

The Jefferies analysts conducted a conference call with a leading dermatologist, Dr. Jeffrey Dover. One area that could prove to be gigantic is called body contouring/fat dissolving. With all the advancements in this area and the growing patient demand, Dr. Dover believes that minimally/non-invasive fat reducing treatments could be a huge opportunity, with potential peak sales in the billions of dollars.

Three companies could be poised to reap the benefits of this huge potential: Kythera Biopharmaceuticals Inc. (NASDAQ: KYTH), Valeant Pharmaceuticals International Inc. (NYSE: VRX) and Zeltiq Aesthetics Inc. (NASDAQ: ZLTQ).

Kythera Biopharmaceuticals

This clinical-stage biopharmaceutical company is focused on the discovery, development and commercialization of novel prescription products for the aesthetic medicine market. In the conference call, Dr. Dover discussed the company’s drug ATX-101 for treating submental fat, or what is called double-chins. ATX-101 is patented formulation of a pure, non-animal-derived version of deoxycholic acid that enables the breakdown of dietary fat. Dr. Dover believes that the clinical data for this drug looks compelling. An FDA action is expected to be given on May 12.

Previously, the FDA’s Dermatologic and Ophthalmic Drugs Advisory Committee voted unanimously to support the approval of its pipeline ATX-101, so it would seem that the likelihood of a positive outcome could be expected.

Jefferies does not cover the stock. The Thomson/First Call consensus price target is a very large $65.50. Shares closed Thursday at $49.82.

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Valeant Pharmaceuticals

Valeant develops, manufactures and markets pharmaceuticals, over-the-counter products and medical devices worldwide. The company has an extensive list of products, including Wellbutrin XL for major depressive disorder in adults; Jublia for onychomycosis of the toenails; Xenazine for chorea; Targretin for cutaneous T-cell lymphoma; Arestin, a subgingival sustained-release antibiotic; and Provenge for the treatment of prostate cancer.

Dr. Dover is somewhat skeptical about Valeant/Solta’s LipoSonix treatment for fat reduction due to its painful ultrasonic treatment protocol. However, some may opt for the treatment and help provide yet another arrow in the quiver for a company with huge earnings potential.

Jefferies has the stock rated Buy, with a $220 price target. The consensus target is $216.50. Shares closed most recently at $207.36.

Zeltiq Aesthetics

This stock could turn out to be a huge winner in the body contouring/fat dissolving arena, and it is a company that the good doctor is very enthused about. Zeltiq Aesthetics is a medical technology company focused on developing and commercializing products utilizing its proprietary controlled-cooling technology platform.

The company’s first commercial product, the CoolSculpting system, is designed to selectively reduce stubborn fat that may not respond to diet or exercise. The CoolSculpting procedure is based on the scientific principle that fat cells are more sensitive to cold than the overlying skin and surrounding tissues. It utilizes patented technology of precisely controlled cooling to reduce the temperature of fat cells in the treated area, which is intended to cause fat cell elimination through a natural biological process known as apoptosis.

Dr. Dover views the company as “best in class” and thinks it has, at least initially, cornered the market for the process. He likes the price point of $750 per application, and the fact that there is much less discomfort to the patient.

Jefferies does not cover the stock. The consensus price target is posted at $36.83. Shares close at $33.55 apiece.

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The bottom line is that for 50 years treatment costs for cosmetic treatments have come down. The mere fact that affordability has come into play can drive huge earnings growth. That is perfect for aggressive growth investors.

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