S&P 500 slips, but losses kept in check as Nvidia climbs ahead of results
On Monday, Lake Street Capital Markets initiated coverage on OrthoPediatrics Corp. (NASDAQ:KIDS), assigning the stock a Buy rating and setting a price target of $37.00. According to InvestingPro data, the stock has experienced a notable 7.84% decline over the past week, with analyst price targets ranging from $26 to $50, suggesting significant potential upside from current levels. The firm’s analyst pointed out the stock’s compelling valuation following a period of fluctuation, noting that it had been several years since OrthoPediatrics had seen a new initiation report. The last time the company’s shares were priced in the low-$20s was back in 2019, and they once traded above $70.
OrthoPediatrics, recognized as the only pure-play pediatric orthopedic company, has been somewhat overlooked due to its unique position in the market. The analyst emphasized the company’s strong potential for growth, highlighting its strategic niche that is unlikely to see new competitors. This assessment is supported by the company’s robust 37.65% revenue growth in the last twelve months and an impressive gross margin of 72.58%, according to recent financial data. The company maintains a strong liquidity position with a current ratio of 6.98, indicating solid financial health. Additionally, OrthoPediatrics is expected to see annual EBITDA margin expansion of more than 300 basis points in the coming years.
The analyst also remarked on the company’s solid financial footing as it approaches cash flow breakeven. Despite these positive attributes, the stock currently trades at approximately 2.3 times its estimated 2025 earnings to sales ratio, which is roughly equal to a comparison group of orthopedic firms that generally have slower growth and lower margins. Lake Street Capital Markets believes that this situation should not persist and that OrthoPediatrics deserves a premium multiple given its favorable characteristics and market position. For deeper insights into OrthoPediatrics’ valuation and growth prospects, including exclusive financial metrics and analyst recommendations, visit InvestingPro, where you’ll find comprehensive research reports and real-time analysis.
In other recent news, OrthoPediatrics Corporation reported its fourth-quarter 2024 earnings, showcasing a revenue of $52.7 million, which exceeded analyst expectations of $50.72 million. However, the company’s earnings per share (EPS) fell short of forecasts, posting a deeper-than-expected loss of -$0.69 against the anticipated -$0.30. JMP analysts maintained a Market Outperform rating with a $50.00 price target, reflecting a positive outlook on the company’s performance. Conversely, Stifel analysts revised their price target for OrthoPediatrics to $32.00 from $40.00, while still holding a Buy rating, citing a cautious outlook on growth despite a positive earnings call. The company reported a significant 52% year-over-year increase in U.S. sales, totaling $42.9 million, and a 5% rise in international sales. Management expressed confidence in its growth prospects, reiterating guidance for 2025 with anticipated revenue growth between 15%-18% and adjusted EBITDA ranging from $15 million to $17 million. OrthoPediatrics is also focusing on expanding its Specialty Bracing franchise and launching new products like the PNP Tibia and DF2 Fracture Brace in 2025. Additionally, the company has centralized its operations by closing its Israeli office to improve cash generation and operational efficiency.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.