Profound Medical has 400 per cent upside, says Paradigm Capital

Upcoming catalysts are reason to get interested in medical device company Profound Medical (Profound Medical Stock Quote, Chart TSX:PRN), according to Paradigm Capital analyst Rahul Sarugaser, who on Wednesday reiterated his “Buy” rating and $4.00 target price.

On Thursday, Profound Medical will be hosting an analyst and investor day in New York City, featuring presentations from six urologists familiar with the company’s TULSA-PRO device for the treatment of prostate cancer.

“The purpose of the day, we anticipate, is to demonstrate to the investment community why the PRN expects to drive strong adoption once it ideally receives FDA approval later this year,” says Sarugaser.

The analyst argues that the company’s adoption strategy will work well, pointing out that PRN’s beachhead market includes intermediate risk prostate cancer patients, which amount to about 100,000 patients a year in the US. Sarugaser makes note of the TACT trial for the TULSA-PRO which last week was shown to have reached its pre-defined goal.

“Since November 2018, we have been calling 2019 as PRN’s breakout year. First we saw a 45-per-cent lift in PRN’s stock in early Q1 owing to better than expected earnings, then last week we saw excellent results from the Pivotal clinical trial. Next we are looking forward to tomorrow’s presentation in New York, then PRN’s podium presentation at the American Urological Association meeting in May, and finally, the filing of the 510(k) application with the FDA likely around the same time,” says Sarugaser.

The analyst expects PRN to generate 2019 revenue and EBITDA of $13.2 million and negative $11.5 million, respectively. His $4.00 target represents a projected return of 400 per cent at the time of publication.