B. Riley sees InfuSystem stock as undervalued with key growth drivers ahead

On Thursday, B.Riley initiated coverage on InfuSystems Holdings (NYSE: INFU) stock, a provider of infusion pumps and related services, with a Buy rating and a price target of $13.00.

The firm highlighted the company's role in facilitating outpatient care for durable medical equipment manufacturers, particularly in supplying oncology pumps to outpatient practices across the U.S. and Canada.

InfuSystems' business also includes a team of biomedical technicians, referred to as "strike teams," who repair equipment for providers. Additionally, the company is expanding its wound care and pain management services.

B.Riley believes that InfuSystems' stock is currently undervalued, attributing the company's lower valuation to non-fundamental issues such as earnings misses and delayed filings. The firm anticipates a positive re-rating of the stock as the company builds on the momentum it demonstrated in the previous quarter.

The financial analysis by B.Riley shows that InfuSystems is trading at 1.3 times sales and 7.1 times adjusted EBITDA, which is lower compared to its peer group's average of 2.2 times sales and 11.6 times adjusted EBITDA.

B.Riley forecasts that InfuSystems' sales will grow in the high-single digits this year, with an adjusted EBITDA margin in the high teens as a percentage. The firm also projects that the company's margins could exceed 20% within the next 12 to 24 months.

In other recent news, InfuSystem Holdings, Inc. has reported record revenues of $33.7 million for the second quarter of 2024, marking a 5.3% increase from the previous quarter and a 6.2% year-over-year increase. The company's adjusted EBITDA margin also improved to 18%.

In other developments, InfuSystem and Sanara MedTech Inc. have secured an exclusive distribution agreement with ChemoMouthpiece, LLC to provide the Chemo Mouthpiece®, an oral cryotherapy device, to cancer patients across the U.S. The device has received FDA 510(k) clearance and is clinically validated to reduce the incidence and severity of oral mucositis, a common side effect of chemotherapy.

These recent developments also include an increase in Oncology revenue by 9% due to increased treatment volumes and collection efforts, while Pain Management revenue saw a significant rise by over 29% in Q2.

However, Wound Care revenue experienced a decrease due to fewer placements of negative pressure pumps. InfuSystem has reiterated its guidance of high single-digit growth and expects a high-teens adjusted EBITDA percentage for the year.

The company's partnership with Smith+Nephew and the upcoming NOPAIN Act, which encourages physicians to prescribe non-opioid alternatives, are expected to drive future growth.

InvestingPro Insights

With B.Riley's optimistic outlook on InfuSystems Holdings (NYSE: INFU), recent data from InvestingPro further supports the company's financial health and growth potential. According to InvestingPro, InfuSystems has achieved a revenue growth of 9.43% over the last twelve months as of Q2 2024, indicating a robust upward trend. Additionally, the company's gross profit margin stands at a strong 50.6%, showcasing its ability to maintain profitability amidst its operations.

InvestingPro Tips highlight that InfuSystems is expected to see net income growth this year, with analysts predicting the company will be profitable. The company's liquid assets also surpass short-term obligations, suggesting a solid financial position for meeting immediate liabilities. Moreover, InfuSystems operates with a moderate level of debt, which aligns with a sustainable financial strategy. For those interested in a deeper analysis, InvestingPro offers several additional tips on InfuSystems, which can be found by visiting their dedicated page.

These financial metrics and insights from InvestingPro reinforce the view that InfuSystems is poised for growth and could indeed be undervalued, as suggested by B.Riley. As the company continues to expand its services and capitalize on the demand for outpatient care equipment, investors may find InfuSystems an attractive opportunity in the healthcare sector.

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