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Investing.com - Morgan Stanley (NYSE:MS) downgraded RxSight Inc. (NASDAQ:RXST) from Overweight to Equalweight on Tuesday, while setting a price target of $9.00. The stock, which has declined nearly 40% in the past week and 75% over the last six months, currently trades at $7.18.
The downgrade comes amid concerns about the medical device company’s growth trajectory, with Morgan Stanley noting an "abrupt deceleration" in RxSight’s product line that has created uncertainty about future performance. According to InvestingPro data, while the company achieved 47% revenue growth in the last twelve months, three analysts have recently revised their earnings expectations downward.
The investment bank stated that despite RxSight trading at approximately 0.8 times its projected 2026 sales, making it one of the cheapest stocks in Morgan Stanley’s coverage universe, the lack of visibility into growth rates over the coming years necessitated the rating change.
Morgan Stanley’s $9.00 price target is based on 1.0 times estimated 2026 sales, reflecting a conservative approach given the current market conditions for the company.
The firm acknowledged that RxSight’s guidance could be considered conservative, but ultimately determined that the uncertainty surrounding the company’s growth prospects was too significant to maintain an Overweight rating.
In other recent news, RxSight reported preliminary second-quarter revenue of $33.6 million, falling short of analyst expectations of $39.8 million. This shortfall was largely attributed to a 49% year-over-year decline in Light Delivery Device sales. Consequently, RxSight significantly lowered its 2025 revenue guidance to between $120 million and $130 million, down from a previous forecast of $160 million to $175 million. The company also adjusted its fiscal year 2025 guidance to approximately $125 million at the midpoint, a decrease from its earlier outlook of $167.5 million. Jefferies downgraded RxSight from Buy to Hold, citing elongated selling cycles and flattened utilization rates. Similarly, BTIG downgraded the stock to Neutral due to disappointing preliminary results and competitive pressures. Wells Fargo (NYSE:WFC) followed suit, downgrading RxSight to Equal Weight, highlighting structural issues and reduced visibility beyond 2025. Despite these challenges, Needham maintained a Buy rating, suggesting potential growth catalysts in international markets and a valuation gap with peers.
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