Profound Medical Corp. has 212% upside, says Mackie Research Capital

A quarter that bested his topline expectations has Mackie Research Capital analyst Andre Uddin feeling expansive about Profound Medical Corp. (Profound Medical Corp. Stock Quote, Chart, News: TSX:PRN).

On Wednesday, Profound Medical reported its Q2, 2017 results. The company lost $4.65-million on revenue of $957,139, up from zero revenue in the same period last year.

“With the continued success in the pilot commercial launch of the Tulsa-Pro system in Europe and the recent acquisition of Philips’s Sonalleve business, Profound has begun to make the leap from product to platform, offering real-time MR guidance as the imaging platform and ultrasound as the energy source for the delivery of non-invasive ablative technology to clinicians,” said CEO Dr. Arun Menawat. “The integration of Sonalleve, including the transfer of staff and know-how, began almost immediately after we reached a definitive agreement with Philips, and thanks to the hard work and dedication of everyone involved, that has allowed for a very smooth transition thus far. We look forward to updating our stakeholders as we progress.”

Uddin notes that Profound’s bottom line was in-line with his expectations, while the company’s revenue was better than he had modeled. The analyst says Profound is delivering what he calls a “TACTful three punch combo with its product offerings.

“The 1st Punch,” Uddin offers, is that “PRN is conducting a pivotal trial with TULSA-PRO (TACT trial) in a total of 110 patients with localized prostate cancer. Patient enrolment is going very well, 50 patients have received the treatment (25 patients were treated in Q2). The treatment phase of TACT is expected to complete by the year end with interim results in early 2018. The 2nd Punch: The European launch of TULSA-PRO is proceeding as expected with excellent physician feedback as patients are being treated. The 3rd Punch: Sonalleve acquisition is being integrated and new distribution agreements are expected. The Knockout: The combined sales of TULSA-PRO and Sonalleve should provide the company with significant growth. We expect TULSA-PRO to launch in the U.S. in 2019 and turn profitable that year.”

In a research update to clients Thursday, Uddin maintained his “Speculative Buy” rating and one-year price target of $3.15 on Profound Medical, implying a return of 212 per cent at the time of publication.

Uddin thinks Profound Medical will generate a fully diluted EPS loss of $0.30 on revenue of $6.1-million in fiscal 2017. He expects those numbers will improve to a loss of $0.09 on revenue of $21.6-million the following year.