Inari Medical shares gain attention with Stryker’s entry into under-penetrated MT market

Monday, Stifel analysts maintained a Hold rating on Inari Medical (TASE:PMCN) Inc. (NASDAQ:NARI) with a price target of $50.00, following news of a definitive acquisition agreement by Stryker Corporation (NYSE:SYK). Stryker announced its intention to purchase Inari Medical, currently valued at $3.79 billion, for $80 per share, a transaction valued at approximately 6.5 times Inari's estimated 2025 revenues.

The acquisition comes after reports of Inari Medical engaging advisors to explore potential interest from multiple parties. Stifel analysts had previously identified the mechanical thrombectomy (MT) market as ripe for mergers and acquisitions due to the significant addressable market and the challenges large-cap MedTech companies face in accessing the MT market both organically and inorganically. According to InvestingPro data, Inari has demonstrated strong market positioning with impressive revenue growth of 22.4% over the last twelve months.

The analysts believe that the acquisition makes strategic sense for Inari Medical, especially considering the company's strong top-line outlook and high gross margins, which InvestingPro data shows reached 86.8% in the last twelve months. The company also maintains a healthy balance sheet with a modest debt-to-equity ratio of 0.08. For Stryker, the acquisition would provide entry into the MT market, leveraging Inari's leading market position in key indications and a fully-scaled selling footprint.

The offer price of $80 per share is seen as reasonable but on the higher end of the valuation spectrum, implying an enterprise value to sales multiple of around 6.5 times based on 2025 estimates. This multiple is close to the average for MedTech companies with over 20% top-line growth, and likely includes a premium for the acquisition. The offer represents a significant premium to Inari's current trading price of $65, which is already near its 52-week high of $65.94. Based on InvestingPro's Fair Value analysis, the stock appears overvalued at current levels.

The transaction's announcement has impacted shares of Penumbra Inc . (NYSE:NYSE:PEN), which declined as the market processed the potential implications of a new, well-funded competitor entering the space. Nevertheless, Stifel analysts view the entry of Stryker into the MT market positively for Penumbra and the sector overall, suggesting that a larger player could benefit the entire market. The analysts also note that the Stryker bid validates the MT opportunity and Penumbra's premium multiple, which coincidentally is also around 6.5 times its estimated 2025 revenues.

For a deeper understanding of Inari Medical's financial health and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable insights.

In other recent news, Stryker and Inari Medical have announced a definitive agreement for Stryker's acquisition of Inari Medical for $80 per share, valuing the deal at approximately $4.9 billion.

This strategic acquisition is set to enhance Stryker's portfolio by adding Inari's specialized position in the rapidly expanding venous thromboembolism (VTE) market. The deal has received unanimous approval from the boards of both companies and is expected to close by the end of the first quarter of 2025.

Inari Medical recently reported a record Q3 revenue of $153.4 million, marking a 21% year-over-year increase, and raised its full-year revenue outlook to between $601.5 million and $604.5 million. Analyst firms Oppenheimer and Canaccord Genuity have given Inari an Outperform and Buy rating respectively, with price targets set at $75.00 and $74.00. These ratings reflect Inari's ongoing efforts in new product launches and market penetration in high-growth international markets.

Inari's ClotTriever Thrombectomy System for deep vein thrombosis has also received national reimbursement approval in Japan, further solidifying its market position. This is a significant development as it aligns with the company's Q4 expectations and paves the way for a wider commercial rollout in Japan.

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