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On Wednesday, Stifel analysts adjusted their outlook on RxSight Inc. (NASDAQ: RXST), reducing the price target to $28.00 from the previous $33.00 while maintaining a Hold rating on the stock. The company’s stock, currently trading near its 52-week low of $24.64, has declined about 52% over the past six months. According to InvestingPro data, RxSight maintains strong financial health with a "GOOD" overall score, despite recent market challenges. The analysts noted that RxSight’s recent performance appears to be influenced by market conditions rather than company-specific issues, suggesting that the stock deserves reconsideration.
The analysts expressed concerns about the slowing growth in market share among trained surgeons for RxSight’s Light Adjustable Lens (LAL) product. They observed that the per-doctor market share could be reaching a saturation point, with approximately 30% penetration already. While the company achieved impressive revenue growth of 57% in the last twelve months, with a strong gross profit margin of 71%, analysts remain cautious about future growth. Additionally, to meet their 2025 estimates, LAL may need to sustain its year-over-year US premium market share growth of more than four percentage points, a target that may be challenging given the increasing competition.
On the positive side, the analysts believe that while RxSight faces headwinds from competition and sales growth challenges for its 2025 Odyssey product, these may not be as significant as anticipated. They also find the company’s valuation attractive, trading at approximately three times its short-term sales. InvestingPro analysis reveals that RxSight holds more cash than debt on its balance sheet, with a healthy current ratio of 11.36x, suggesting strong financial flexibility to navigate future challenges. Get access to 8 more exclusive ProTips and comprehensive financial analysis through InvestingPro’s detailed research reports.
In their analysis, Stifel used a variety of proprietary methods, including a reverse discounted cash flow (DCF) model that indicated a high-teens long-term sales growth rate, which they consider achievable but likely dependent on overseas market success.
In conclusion, while Stifel sees limited potential for further downside in RxSight’s stock price, they remain cautious, opting to observe how the company navigates the competitive landscape in the US and the potentially challenging and costly efforts to expand into international markets.
In other recent news, RxSight Inc. reported its fourth-quarter 2024 earnings, revealing a significant earnings per share (EPS) of $0.03, surpassing the anticipated -$0.17. The company achieved a revenue of $40.2 million for the quarter, reflecting a 41% increase year-over-year, although slightly below the forecasted $40.39 million. For the full year 2024, RxSight’s revenue totaled $139.9 million, marking a 57% increase from the previous year. Looking ahead, the company reaffirmed its 2025 guidance, projecting revenues between $185 million and $197 million, suggesting a 32% to 41% year-over-year growth.
Jefferies and BTIG analysts both adjusted their price targets for RxSight, with Jefferies lowering it to $50 and BTIG to $44, while both maintained a Buy rating. The analysts cited the company’s strong financial performance and future growth potential as reasons for their continued positive outlook. RxSight’s recent earnings call highlighted the expansion of its Light Adjustable Lenses (LALs) and Light Delivery Devices (LDDs), with LAL sales increasing by 61% year-over-year in the fourth quarter. Additionally, the company is focusing on obtaining international approvals to further expand its market presence.
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