Profound Medical still has a huge upside, says Paradigm Capital

Paradigm Capital analyst Rahul Sarugaser is calling 2019 a breakout year for medical device company Profound Medical (Profound Medical Stock Quote, Chart TSX:PRN), who’s recent rally is only the beginning, the analyst says.

“PRN’s stock price has risen from its low of $0.43 on December 20, 2018, through $0.55 at the start of 2019, and closing at $0.82 yesterday. This represents a 91 per cent lift from its low and 49 per cent since the beginning of the year,” said Sarugaser in a research note to clients on Wednesday. “We have been highlighting, since late November, that 2019 is PRN’s breakout year; as such, we see this initial stock run as simply the first of several during this catalytic year for PRN.”

The analyst outlines three catalysts for the stock in 2019: (1) a sales ramp up, as witnessed by the company’s recent Q4 which featured revenue of $1.6 million, a 33 per cent beat of Sarugaser’s estimate and 60 per cent over the consensus, which portends of things to come; (2) a strong balance sheet with $35 million in cash; (3) the completion of its Phase 3 clinical trial and submission of its 510(k) application to the FDA (estimated at late in Q1 or early in Q2).

Sarugaser has reiterated his “Buy” recommendation and $4.00 target, which represents a projected return of 388 per cent at the time of publication.