What the bad jobs report means for markets
On Friday, Stifel analysts updated their outlook on Outset Medical (TASE:BLWV) Inc. (NASDAQ: OM), raising the price target significantly from $6.00 to $15.00 while maintaining a Buy rating. The stock has shown strong momentum, gaining 36% in the past week, with the current price at $10.09. The revision follows the company’s recent 1-for-15 reverse stock split, which took effect yesterday, substantially reducing the number of shares from approximately 265 million to around 17 million. According to InvestingPro data, three analysts have recently revised their earnings expectations upward for the upcoming period.
The reverse stock split prompted Stifel to adjust their financial model to reflect the new share count. According to the firm, the first quarter of 2025 is projected to have approximately 17.6 million diluted shares outstanding. They anticipate slight increases in the share count in subsequent quarters and years but have made no other changes to their model projections. InvestingPro analysis indicates the company maintains a strong liquidity position with a current ratio of 5.69, suggesting robust ability to meet short-term obligations.
Stifel’s revised price target of $15 is based on a valuation multiple that aligns with the trading multiples of small-cap MedTech peers. These companies exhibit similar growth rates and cash burn profiles to Outset Medical. The target price is derived using an approximate 1.3x 2025 enterprise value to sales (EV/Sales) multiple. With a current market capitalization of $173.47 million and an overall Financial Health score of "FAIR" from InvestingPro, the company appears undervalued based on comprehensive Fair Value analysis. Discover more insights and 10+ additional ProTips about Outset Medical with an InvestingPro subscription, including detailed valuation metrics and peer comparison tools.
The analyst team led by Rick Wise (LON:WISEa) did not alter any other aspect of their projections for Outset Medical, focusing solely on the implications of the reverse stock split. The new share count is expected to provide a more accurate reflection of the company’s value and align with industry standards for similar growth-stage medical technology firms.
Outset Medical specializes in developing innovative medical devices, particularly in the dialysis sector. The adjustment in the share count and the updated price target represent a significant shift for the company’s stock, which will likely be closely watched by investors following the recent changes.
In other recent news, Outset Medical reported its Q4 2024 earnings, showcasing an improved financial performance with an earnings per share (EPS) of -$0.37, surpassing analysts’ forecasts of -$0.43. The company’s revenue for the quarter was $29.5 million, slightly above projections, although it experienced a year-over-year decline. Operational improvements included significant debt reduction and increased recurring revenue, which contributed to the positive earnings surprise. Additionally, Outset Medical implemented a one-for-fifteen reverse stock split, reducing the number of shares from approximately 265 million to about 17 million, a strategic move aimed at adjusting the number of shares outstanding. Following this corporate action, BTIG analysts revised the stock’s price target to $45, maintaining a Buy rating, reflecting the adjusted share count. The company’s board also corrected a clerical error in its preferred stock documentation, which had previously affected share distribution. These developments highlight Outset Medical’s ongoing efforts to improve its financial standing and operational efficiency.
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