AI underweights weigh on large-cap funds performance says Goldman
Monday, Wells Fargo (NYSE:WFC) initiated coverage on Kestra Medical (TASE:BLWV) Technologies (NASDAQ:KMTS), currently trading at $23.43, with an Overweight rating and a price target of $28.00. According to InvestingPro data, the stock’s RSI indicates overbought territory, suggesting careful entry point consideration. The firm’s analyst pointed out Kestra’s development of the Assure, a second-to-market wearable cardioverter defibrillator (WCD) system designed to protect patients from sudden cardiac arrest (SCA). WCDs are often prescribed post-heart attack or following a heart failure diagnosis, acting as a temporary solution before a potential implantable cardioverter defibrillator (ICD) is installed.
The analyst highlighted the significant market opportunity for WCDs, citing an estimated worldwide total addressable market (TAM) of approximately $10 billion. With worldwide sales of WCDs surpassing $1.3 billion, Kestra, currently valued at $1.2 billion in market cap, is positioned in a large, growing, and underpenetrated market with only one other FDA-approved WCD manufacturer, Zoll Medical, a subsidiary of Asahi Kasei. The company maintains a healthy current ratio of 2.81, though InvestingPro analysis indicates it’s not yet profitable over the last twelve months.
Kestra’s market share for the fiscal year 2025 was estimated at 4.8%, with Wells Fargo projecting an increase to 15.7% by the fiscal year 2029. This optimistic forecast is supported by feedback gathered through physician checks and surveys, which suggest that Kestra’s Assure system offers several advantages over its competitor’s product, the LifeVest WCD.
The advantages of Assure, as reported by Wells Fargo, include better wearer comfort, significantly fewer false alarms, and availability in both male and female versions. These improvements are believed to have notably enhanced patient compliance with the Assure system compared to the LifeVest, addressing one of the main hurdles in the adoption of WCDs.
Wells Fargo’s positive outlook on Kestra Medical Technologies is based on the potential for increased market share and the benefits of Assure’s design and functionality, which could lead to wider acceptance and use among patients requiring temporary protection from SCA. Based on InvestingPro Fair Value analysis, the stock appears overvalued at current levels. Subscribers can access 6 additional ProTips and comprehensive financial metrics to make more informed investment decisions.
In other recent news, Kestra Medical Technologies has garnered attention from several major analyst firms. Stifel initiated coverage with a Buy rating and a price target of $28, highlighting the potential of Kestra’s ASSURE system to achieve over 40% year-over-year sales growth in the coming years. Piper Sandler also began coverage with an Overweight rating and set a price target of $27, emphasizing Kestra’s strategic investment in expanding its sales force to penetrate the wearable cardioverter defibrillator market. Goldman Sachs assigned a Neutral rating with a $24 price target, noting the company’s anticipated sales growth and market disruption potential.
In addition to analyst coverage, Kestra has made strategic moves following its initial public offering. The company issued warrants for common shares to investment entities and adopted a new incentive plan for employees and directors. These developments align with Kestra’s growth strategy, as reflected in recent amendments to its bye-laws and an increase in authorized share capital to $100 million. The company’s focus on expanding its market presence is supported by FDA approval and strong clinical data for its products. These actions and analyst insights suggest Kestra is well-positioned to capture a significant share of the $1 billion U.S. WCD market.
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