Opsens is still cheap despite mixed Q1, says M Partners

It’s first quarter results didn’t deliver what he expected on the topline, but M Partners analyst Steven Salz still thinks Opsens (Opsens Stock Quote, Chart, News: TSX:OPS) is undervalued.

Opsens today reported its Q1, 2017 results. The company lost $2.54-million on revenue of $3.74-million, a 119 per cent topline bump over the same period last year.

“We are convinced that the distinctive features of the OptoWire, widely recognized by key opinion leaders in the interventional cardiology field, will allow us to capitalize on the fast-growing FFR market,” said CEO Louis Laflamme. “We are putting in place the necessary investment and infrastructure to become a major player in the industry. The improvements to our production processes over the past few months have enabled us to increase our competitiveness and our ability to start to meet the growing demand for our products,” added Mr. Laflamme.

Salz says that despite the fact that Opsens’s revenue fell short of his estimate of $4.3-million, the company did beat his expectations of gross profit and on gross margin, where the company’s 32 per cent figure easily bested his estimate of 25 per cent. Overall, the analyst thinks the stock is still undervalued.

“At current levels we believe Opsens offers a compelling entry point ahead of a major scaling period for its FFR segment as it ramps to full 8-line capacity,” he says. “We also expect Opsens to enter additional sales, marketing, and distribution partnerships through F17E to further the torque implicit in its new facility ramp. Lastly, should oil prices begin to recover, we believe Opsens may consider selling its industrial segment, creating a focused medical company ripe for a longer-term takeout option.”

In a research update to clients today, Salz maintained his “Buy” rating and one-year price target of $2.10 on Opsens.