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On Tuesday, Truist Securities updated its outlook on Procept BioRobotics Corp (NASDAQ: PRCT) stock, increasing the price target to $79 from the previous $72 while retaining a Buy rating on the stock. The adjustment comes as the firm recognizes Procept's robust growth trajectory and potential market expansion.
The new price target set by Truist Securities is founded on approximately 12.7 times the enterprise value to sales (EV/Sales) ratio applied to the firm's projected 2025 revenue.
This valuation is slightly below Procept's forward 2024 multiple of 13.5 times but remains at a premium compared to the average of about 8 times for the broader high-growth peer group.
Procept's growth profile stands out within its sector, with an estimated compound annual growth rate (CAGR) exceeding 45% from 2023 to 2025, which notably surpasses the 20% average CAGR for its central nervous system (CNS) peers.
The company's expansion into additional treatment markets, including cancer and benign prostatic hyperplasia (BPH) management for patients who opt out of drug treatments, further justifies the premium valuation.
Truist Securities also pointed out that high-growth MedTech peers with similar growth and valuation profiles typically range between 9.5 times to 16 times EV/Sales. This comparison supports a double-digit EV/Sales multiple for Procept, particularly as the company continues to exhibit an accelerating operational leverage improvement trajectory. The firm's analysis suggests confidence in Procept's ability to maintain its growth momentum and enhance its market position.
In other recent news, Procept BioRobotics has been making significant strides in the urology sector. The company reported an impressive 83% revenue surge in Q1 2024, reaching $44.5 million, largely driven by sales of its Aquablation therapy and Aquabeam Robotics Systems. Despite a reported net loss of $26 million, the company achieved a high gross margin of 56.2% and anticipates this to rise to between 58% and 59% by year-end.
Financial services firms TD Cowen and Piper Sandler have both shown confidence in Procept BioRobotics, increasing their price targets for the company's shares. TD Cowen raised its target to $75, maintaining a Buy rating, following the company's presentation at the American Urological Association (AUA) investor event. Similarly, Piper Sandler lifted its price target to $75, reiterating an Overweight rating on the stock, after noting strong momentum within the company's base business.
Procept BioRobotics' Aquablation therapy, a minimally invasive waterjet ablation therapy for prostate surgery, has been receiving significant interest. The company has plans to expand the application of this technology to include prostate cancer treatment, which could significantly increase its market reach. These are recent developments that underline Procept BioRobotics' growth strategy and its potential for market penetration in the urology sector.
InvestingPro Insights
Procept BioRobotics Corp's (NASDAQ: PRCT) market dynamics and future prospects are further illuminated by key metrics and insights from InvestingPro. With a market capitalization of $3.44 billion, Procept is navigating a challenging financial landscape, as indicated by its negative P/E ratio of -30.32, which further adjusts to -33.25 when looking at the last twelve months as of Q1 2024. This suggests that investors are pricing the company's growth potential rather than current earnings. The company's revenue, however, tells a story of robust growth, with an impressive 83.44% increase in the last twelve months leading up to Q1 2024. This aligns with the company's growth narrative and Truist Securities' positive outlook.
InvestingPro Tips highlight that Procept has seen a strong return over the last year, with a 83.12% total price return, and the trend continues with a 28.56% return over the last three months. These figures underscore the company's strong market performance and investors' optimism about its growth trajectory. Additionally, Procept's liquid assets exceed its short-term obligations, providing a measure of financial stability in the near term. However, analysts caution that the company may not be profitable this year, and it is trading at a high Price / Book multiple of 13.02, which could signal an elevated valuation relative to its book value.
For investors seeking a comprehensive analysis, there are additional InvestingPro Tips available that can provide deeper insights into Procept's financial health and market position. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and gain access to these valuable tips to inform your investment decisions.
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