On Wednesday, JPMorgan issued a downgrade for CVRx Inc (NASDAQ:CVRX) from Overweight to Neutral and significantly reduced the price target to $13 from the previous $36 for the shares. The revision follows CVRx's first-quarter earnings report, which fell below expectations, prompting the company to revise its 2024 outlook downwards.
CVRx's sales for the quarter totaled $10.8 million, not meeting the anticipated $11.5 million. The shortfall was attributed to disruptions within the U.S. sales force due to dissatisfaction with the compensation plan, the retirement of former CEO Nadim Yared, and typical early-year turnover. These factors contributed to decreased productivity among the sales team.
Although the company has since stabilized its sales force and observed positive trends in March, the time required for new sales representatives to become fully effective is expected to continue affecting the utilization and expansion into new centers in the short term.
JPMorgan acknowledged the strategic initiatives introduced by new CEO Kevin Hykes, which are aimed at increasing the adoption of Barostim—a heart failure treatment device—through enhanced clinical data, awareness, and access.
However, the firm anticipates that it will take considerable time and investment for these efforts to translate into tangible results. In light of these challenges and the need for the new sales team to gain experience, JPMorgan has decided to adopt a more cautious stance on the stock, opting to observe from the sidelines until a more definitive trajectory toward growth can be ascertained.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.