Outset Medical stock target cut to $15 at TD Cowen

On Friday, TD Cowen adjusted its outlook on Outset Medical (TASE:BLWV) Inc . (NASDAQ:OM) by significantly reducing the price target from $45.00 to $15.00, while still maintaining a Buy rating on the company’s shares. The stock, currently trading at $10.23, has experienced significant volatility with a 12% decline in the past week. Analyst Joshua Jennings at TD Cowen revised the target price in response to recent alterations in the company’s share count, which now reflects the conversion of preferred shares issued in the latest Private Investment in Public Equity (PIPE) financing to common shares, and the effect of a one-for-15 reverse stock split. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimate.

The firm’s analysts have updated their model to incorporate these share count changes. Despite the reduction in the price target, TD Cowen’s revenue projections for Outset Medical have not been altered. The company currently generates revenue of $113.69 million, with a challenging EBITDA of -$102.09 million in the last twelve months. The new price target is based on an enterprise value-to-sales (EV-to-sales) multiple of 2.1 applied to the firm’s 2026 sales estimate of $140 million. The analysts believe that this multiple is justified due to a year-to-date market-wide valuation contraction for small-cap stocks. InvestingPro subscribers have access to 10+ additional key insights about Outset Medical’s financial health and growth prospects.

Outset Medical, a medical technology company, has also commented on the impact of tariffs on its operations. During its fourth-quarter earnings call in February, the company indicated that it has a special exemption for products used by the chronically disabled, which should shield it from the effects of the latest tariff policy initiated by President Trump. Outset Medical has discussed strategies to mitigate the impact of tariffs, but it is confident that its exemption will remain in place.

The company’s exemption and its plans for tariff mitigation are part of its broader strategy to navigate the current economic climate. As Outset Medical continues to adapt to changes in the market and regulatory environment, TD Cowen’s analysts have taken these factors into account while maintaining their positive stance on the company’s stock with a Buy rating.

In other recent news, Outset Medical has implemented a one-for-fifteen reverse stock split, significantly reducing its share count from approximately 265 million to around 17 million. Following this corporate action, Stifel and BTIG analysts have updated their price targets for the company. Stifel has raised its target to $15, maintaining a Buy rating, while BTIG has set a new target of $45, also with a Buy recommendation. These adjustments reflect the new share count and align with valuation multiples used for similar companies.

Additionally, Outset Medical has corrected a clerical error in its preferred stock documentation, rectifying a mistake in the mathematical formula related to its Series A Non-Voting Convertible Preferred Stock. This correction followed the conversion of 842,753 shares of preferred stock into 210,688,250 shares of common stock, which previously increased the total common shares to over 265 million before the reverse stock split. The company has been transparent about these changes, filing necessary amendments with the Delaware Secretary of State and the U.S. Securities and Exchange Commission. These recent developments are significant for investors monitoring Outset Medical’s corporate actions and stock valuation.

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