Needham maintains Buy rating on RxSight stock despite near-term concerns

Investing.com - Needham has reiterated its Buy rating and $22.00 price target on RxSight Inc. (NASDAQ:RXST), maintaining its positive outlook despite acknowledging near-term challenges for the ophthalmology technology company. The stock, currently trading at $12.79, has seen significant pressure with a 77.6% decline over the past year. According to InvestingPro data, analyst targets range from $16 to $28, suggesting potential upside.

The research firm believes that while RxSight is "likely in the penalty box over the near-term," the company’s new guidance incorporates "areas of conservatism" that could provide room for upside. Despite current challenges, InvestingPro analysis shows the company maintains strong financial health with a current ratio of 12.68 and more cash than debt on its balance sheet.

Needham identified potential growth catalysts for RxSight over the next 12-18 months, including expansion of its U.S. commercial pivot and recent international launches in the United Kingdom (TADAWUL:4280), European Union, and South Korea.

The firm noted that RxSight shares were trading around $8.30 in after-hours trading, which translates to approximately 0.8x 2026 EV/sales multiple assuming no growth from the mid-point of 2025 guidance.

Needham highlighted a valuation gap between RxSight and its small-cap ophthalmology peers, noting that Staar Surgical trades at a 1.8x multiple and Sight Sciences (NASDAQ:SGHT) at a 1.5x multiple on a 2026 EV/sales basis, suggesting potential for RxSight’s valuation to improve over time despite its "more uncertain growth outlook."

In other recent news, RxSight has reported preliminary second-quarter revenue of approximately $33.6 million, falling short of analyst expectations of $39.8 million. This revenue decline has led the company to significantly lower its 2025 revenue guidance to between $120 million and $130 million, down from the previous forecast of $160 million to $175 million. The reduction in guidance reflects a potential year-over-year decline of 7% to 14%. Weak sales of the company’s Light Delivery Devices, which fell 49% compared to the same period last year, have been a major factor in this revision. In response to these challenges, RxSight has raised its gross margin guidance to 72-74% and reduced its operating expense forecast to $145-$155 million.

Analysts have reacted to these developments, with BTIG downgrading RxSight from Buy to Neutral, citing competitive pressures and sales challenges. Wells Fargo (NYSE:WFC) also downgraded the company from Overweight to Equal Weight, reducing its price target significantly and pointing to structural issues that may take time to resolve. Meanwhile, Stifel has maintained a Hold rating, noting a shift in surgeon sentiment regarding RxSight’s Light Adjustable Lens technology. Despite the challenges, there remains cautious optimism about the company’s technology and potential international expansion opportunities.

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