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On Friday, Lake Street Capital Markets initiated coverage on Sensus Healthcare (NASDAQ:SRTS), a medical device company specializing in non-invasive treatments for non-melanoma skin cancer (NMSC) and other skin conditions. The firm assigned a Buy rating to Sensus Healthcare shares, accompanied by an $18.00 price target. With a market capitalization of $126 million and a strong gross profit margin of 61%, Sensus has demonstrated robust financial performance, achieving a remarkable 111% return over the past year.
The analyst at Lake Street highlighted the resurgence of Superficial Radiation Therapy (SRT), noting its historical prevalence in dermatology offices during the 1970s. Despite SRT’s proven safety and effectiveness, regulatory changes and shifts in reimbursement policies led to a decline in its use until Sensus introduced a modern SRT solution in 2010. Since then, Sensus has successfully installed over 750 units of their SRT-100 product line. InvestingPro analysis shows the company holds more cash than debt and maintains strong liquidity, with current assets well exceeding short-term obligations.
The Centers for Medicare & Medicaid Services (CMS) increased reimbursement for SRT by 66% in 2021, which contrasts with the consistent reduction in reimbursements for Mohs micrographic surgery (MMS), the "gold standard" surgical method for NMSC treatment. The analyst emphasized the benefits of SRT, including its non-invasive nature, absence of surgical scarring, and the ability for patients to continue their daily activities during treatment. These advantages are not shared by MMS and other surgical options, which currently dominate the market.
Sensus Healthcare currently operates without direct competition in the SRT market, and the analyst suggested that it is unlikely for competitors to emerge in the near future. The firm’s positive stance on Sensus Healthcare reflects a belief in the company’s potential for growth and market dominance due to its unique product offering and favorable changes in the reimbursement landscape. According to InvestingPro data, the stock appears fairly valued based on comprehensive Fair Value analysis. Subscribers can access 7 additional ProTips and detailed financial metrics in the Pro Research Report, available exclusively on InvestingPro.
In other recent news, Sensus Healthcare has seen a notable uptick in its financial performance, with the third quarter of 2024 bringing in revenues of $8.8 million, a 127% increase from the previous year’s figures. This surge is largely attributed to the successful shipment of 27 SRT systems, including one to an international customer. The company also reported a net income of $1.2 million, a significant improvement from the predicted loss.
H.C. Wainwright responded to these developments by increasing the stock price target for Sensus Healthcare to $11.00, maintaining a Buy rating on the stock. In addition, Sensus Healthcare has expanded its Fair Deal Agreements, notably securing a significant agreement with a large network of dermatology clinics across the United States.
The company’s CEO, Joseph Sardano, has expressed optimism about the company’s trajectory, citing the strength of their technology and software. Sensus Healthcare is also focused on expanding its market reach, especially in non-melanoma skin cancer treatment and international markets. These are among the recent developments for the company, which is maintaining a healthy cash position with $22.6 million in reserves and no debt.
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