Look for health device tech company Profound Medical (TSX:PRN) to continue its upward momentum over the rest of 2018, says analyst Rahul Sarugaser with Paradigm Capital, who on Thursday named the stock a Top Pick for Q2/18, with a reiterated “Buy” rating and 12-month target price of $3.00.
Last month, Mississauga-based Profound Medical closed on a $34.5 million bought deal financing round, which will be put towards its Phase III clinical trials for its TULSA-PRO technology, a combined MRI and ultrasound device for the ablation of pathologic prostate tissue.
Sarugaser says that near and middle-term catalysts from Profound are likely to be growth drivers for the stock.
“We see the next three to four months as an accretive time for PRN, as the company will be presenting interim data in May and, hopefully, receiving Chinese FDA approval in Q2– Q3,” says the analyst in a note to clients. “Furthermore, by building a robust sales and marketing machine to boost sales around Q4, as well as achieving up-listings to the TSX and NASDAQ in Q3–Q4, we anticipate PRN maintaining its upward momentum through 2018.”
The analyst calculates a current risk-adjusted net present value of $299 million for PRN, resulting in a price target of $3.11 per share, which he rounds to $3.00.
Sarugaser believes that if the company does publish positive final data on clinical trials by the end of 2018 or early 2019, the company’s valuation will rise to $485 million or $5.04 per share and, once TULSA-PRO hits the market, to $635 million or $6.61 per share.
The analyst predicts 2018 revenue, EBITDA and EPS for PRN of $13.5 million, negative $13.4 million and negative $0.26, respectively. His 12-month target of $3.00 represents a potential return on investment of 188 per cent at the time of publication.