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On Monday, Jefferies analysts revised their stance on EDAP TMS S.A. (NASDAQ:EDAP), downgrading the stock from Buy to Hold and significantly reducing the price target to $2.00 from the previous target of $8.00. The adjustment comes amid concerns of potential downside to consensus estimates and uncertainties in the company’s business segments. The stock, currently trading at $1.91, has declined 76% over the past year and sits near its 52-week low of $1.71. According to InvestingPro data, technical indicators suggest the stock is in oversold territory.
EDAP TMS, a company specializing in therapeutic ultrasound, is facing challenges as analysts predict slower sales growth in its High-Intensity Focused Ultrasound (HIFU) business. While growth in the mid-teen percentage range is expected for HIFU sales, consensus estimates are set higher, which Jefferies believes may not be met. Additionally, the company’s decision to exit hardware sales in the non-HIFU business, which accounts for 63% of total sales, is anticipated to impact revenue projections through fiscal year 2026. InvestingPro analysis reveals the company is quickly burning through cash, with negative EBITDA of $18.61 million in the last twelve months.
The revised price target of $2.00 reflects Jefferies’ valuation based on one times the projected 2026 sales. The analysts have excluded potential revenue from endometriosis or Benign Prostatic Hyperplasia (BPH) applications in their forecast due to regulatory hurdles and uncertainties regarding the timeline for these treatments. Get deeper insights into EDAP’s valuation and 8 additional key ProTips with InvestingPro, including comprehensive analysis of the company’s financial health, which currently rates as FAIR.
Jefferies’ updated assessment indicates a more cautious outlook on EDAP TMS’s near to mid-term performance. The firm emphasizes that while there could be upside from new applications, these are not currently factored into their forecast because of the regulatory and timeline uncertainty surrounding these potential additions to the company’s product portfolio. The broader analyst consensus maintains a more optimistic view, with targets ranging from $4.50 to $19.00, though three analysts have recently revised their earnings expectations downward.
In other recent news, EDAP TMS S.A. reported a revenue increase of 3.6% year-over-year for the fourth quarter of 2024, reaching €20.3 million. This growth was driven by a 15.7% rise in High-Intensity Focused Ultrasound (HIFU) revenue, totaling €23.8 million for the year. Despite a net loss of €1.9 million, the company showed improvement from the previous year’s loss of €5 million. Piper Sandler adjusted its price target for EDAP TMS to $4.50 from $5.00, maintaining an Overweight rating, while H.C. Wainwright reiterated a Buy rating with a $19.00 price target, expressing confidence in the company’s growth trajectory. EDAP TMS is advancing its Focal One technology with strategic focus on new applications for pancreatic cancer and benign prostate hyperplasia (BPH), alongside ongoing development for endometriosis. The company is conducting Phase 1/2 studies for both pancreatic tumors and BPH, aiming to define optimal treatment parameters and evaluate the efficacy of HIFU treatments. These developments reflect EDAP’s commitment to expanding the market for its Focal One technology and enhancing its strategic focus on HIFU applications.
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