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On Friday, Piper Sandler adjusted its price target for EDAP TMS S.A. (NASDAQ:EDAP) shares, bringing it down to $4.50 from the previous $5.00, while maintaining an Overweight rating on the stock. According to InvestingPro data, the stock is currently trading at $2.22, down nearly 70% over the past year, suggesting potential upside based on analyst targets ranging from $4.50 to $19.00. The move follows the company’s fourth-quarter earnings report, which revealed revenues of $21.5 million, a 1.1% year-over-year increase, slightly above the $21 million anticipated by Wall Street and Piper Sandler’s own estimate of $20.9 million. InvestingPro analysis shows the company maintains a healthy balance sheet with more cash than debt and a strong current ratio of 2.18, though it’s currently experiencing rapid cash burn.
EDAP’s financial results were bolstered by strong sales of its Focal One system, with 11 units sold in the fourth quarter of 2024 compared to the past record of 10 set in the same quarter of 2023. The sales achievement contributed to a gross margin of 41.04% according to InvestingPro, the highest the company has seen in two years, highlighting the potential for improved profitability as system sales continue to grow. Get access to 6 more exclusive InvestingPro Tips and comprehensive financial analysis in our detailed Pro Research Report.
In a statement, Piper Sandler analysts noted the strategic shift by EDAP’s management to increase the company’s focus on High-Intensity Focused Ultrasound (HIFU) by scaling back on non-HIFU categories. This decision is expected to benefit the company’s long-term profitability and provide a clearer investment narrative.
Despite the reduction in the price target, Piper Sandler’s analysts believe that EDAP’s stock is currently undervalued. They reiterated their positive stance, stating that there is no change to their Overweight rating and have adjusted the price target to $4.50 accordingly. The firm’s assessment comes after a detailed review of EDAP’s quarterly performance and strategic initiatives announced during the company’s earnings call.
In other recent news, EDAP TMS reported a 3.6% year-over-year revenue increase for the fourth quarter of 2024, reaching €20.3 million. Despite a net loss of €1.9 million, this was a significant improvement from the previous year’s €5 million loss. The company noted a 15.7% increase in HIFU revenue, which contributed to a full-year revenue of €64.1 million, up 6.1% from 2023. EDAP TMS continues to expand its Focal One system across the U.S., with over 50% of states now equipped with the technology. The company is also advancing clinical trials for its High-Intensity Focused Ultrasound (HIFU) technology in treating pancreatic cancer and benign prostate hyperplasia (BPH). H.C. Wainwright maintained its Buy rating on EDAP TMS, expressing optimism about the company’s growth and potential FDA approval for its BPH treatment. The recent CE Mark approval for treating deep infiltrating endometriosis marks a significant regulatory milestone for EDAP TMS, allowing controlled market entry in European countries.
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