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On Friday, Raymond (NSE:RYMD) James analysts adjusted their stance on Profound Medical (TASE:BLWV) Corp. (NASDAQ:PROF), downgrading the company’s stock rating from Strong Buy to Outperform and lowering the price target to $11 from $17. The stock, currently trading at $4.45, has seen a significant decline of over 41% in the past year. According to InvestingPro analysis, the company appears slightly undervalued based on its Fair Value metrics. This shift comes in response to first-quarter earnings that did not meet revenue expectations, particularly in recurring revenue, although capital equipment sales matched predictions with two new installations and one revenue model conversion.
The company maintained a 71% gross margin; however, operational expenses of approximately $11.8 million, which exceeded estimates by $1.1 million, led to a net loss of $10.6 million. InvestingPro data reveals that despite current losses, the company maintains a strong liquidity position with a current ratio of 10.52 and more cash than debt on its balance sheet. Get access to more detailed financial health metrics and 5 additional ProTips with an InvestingPro subscription. Despite the financial results, Raymond James remains optimistic about the potential of Profound Medical’s TULSA™ procedure to become a standard of care for prostate disease, given its safety, efficacy, and versatility.
Analysts highlighted the company’s strategic preparations for market expansion, including Medicare/Medicaid coverage, the potential for increased commercial payer coverage following the CAPTAIN trial data presentation at the American Urological Association meeting, and the recruitment of a robust sales and marketing team. Additionally, Profound Medical is launching new products such as BPH-focused modules and the TULSA+ interventional MRI suite, which are expected to contribute to market growth.
Raymond James anticipates that Profound Medical’s revenue will significantly increase in the second half of 2025, estimating that 70% of the year’s revenue will be generated during this period. This projection aligns with the company’s impressive revenue growth of 48.35% over the last twelve months, as reported by InvestingPro. Discover comprehensive growth forecasts and detailed analysis in the exclusive Pro Research Report, available for over 1,400 US stocks. The firm aligns with the company’s target of approximately 70% year-over-year growth for FY25 but holds a conservative view for FY26 and FY27, projecting 87% and 56% growth, respectively.
The revised price target of $11 reflects concerns over peer multiple compression and economic uncertainties that may affect TULSA™’s adoption rate. Despite the downgrade, Raymond James believes Profound Medical shares will yield positive returns over the next 12 months. However, they expect the stock to remain in a state of uncertainty until the company starts showing substantial sales or announces significant commercial payer coverage, events that are anticipated in the latter half of 2025.
In other recent news, Profound Medical Corp. reported its financial results for the fourth quarter of 2024, revealing a significant improvement in earnings and revenue. The company achieved an earnings per share (EPS) of $0.20, notably exceeding the forecasted EPS of -$0.35, while revenue reached $4.2 million, marking a 108% increase year-over-year. Additionally, Stifel analysts have maintained a Buy rating with a $12.00 price target for Profound Medical, following the company’s strong performance and revenue growth. The company also revised its financial statements to correct a previous overstatement of revenue by $472,000 and transitioned its reporting to U.S. Generally Accepted Accounting Principles (GAAP) from International Financial Reporting Standards (IFRS). Profound Medical’s management emphasized plans for commercial expansion in 2025, including targeting major U.S. cancer centers and scaling its TULSA technology. The company has also filed details for its upcoming Annual and Special Meeting of Shareholders, providing transparency in governance and shareholder engagement. These developments highlight Profound Medical’s efforts to maintain compliance and transparency while pursuing growth initiatives.
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