Profound Medical Corp (Profound Medical Corp Stock Quote, Chart, News TSX:PRN) is primed and ready, says Rahul Sarugaser, analyst for Raymond James.
In an update to clients on Friday the analyst said that with its first commercial sales in the US for the TULSA-PRO, Profound has the potential to blow well past his sales estimates and that PRN “is a story in which we have very strong conviction.”
Toronto-based medical device company Profound announced on Friday a ten-for-one share consolidation, which will change the count of common shares outstanding on the TSX to 11.8 million on or about October 16, 2019. Management believes that the consolidation should permit it to qualify for a listing on the NASDAQ exchange, a move which Sarugaser says is likely to be completed on or before November 22, 2019.
Profound is commercializing its TULSA-PRO technology, which combines real-time MRI and ultrasound for the ablation of prostate tissue as well as Sonalleve a platform for the treatment of uterine fibroids. The TULSA-PRO has recently been given 510(k) marketing authorization by the US Food and Drug Administration and the company is now launching marketing efforts in the US.
“(Profound Medical Corp) has the potential to blow well past our original sales estimates…”
Sarugaser says that any weakness in PRN’s share price related to the share consolidation should be taken as an opportunity to add to positions, for a number of reasons.
The analyst says, “A NASDAQ listing would be a powerful shift for PRN as it would expose the company’s story to a much deeper pool of US-based biotech/medtech investors. Further, given management’s prior success at Novadaq Technologies (NVDQ)—which was sold to Stryker Corp for US$701 million in 2017—we believe there is a significant following of prior NVDQ investors that would re-invest in this management team through PRN.”
“In our initiation of coverage, we estimated PRN completing three sales of TULSA-PRO in the US over the remainder of 2019. Just three weeks after receiving FDA clearance for marketing of TULSA-PRO the company announced its first US commercial sale, which indicates to us that PRN has the potential to blow well past our original sales estimates,” he writes.
Sarugaser rates PRN as “Outperform” and thinks that the company will generate fiscal 2019 revenue and EBITDA of $5 million and negative $15 million, respectively, and fiscal 2020 revenue and EBITDA of $12 million and $16 million, respectively. (All figures in Canadian dollars unless where noted otherwise.)
“With FDA clearance under its belt, with strong clinical data that provides for a compelling adoption/sales proposition, and with its highly experienced management team, PRN is primed for the big-time,” Sarugaser says.
Profound last reported its quarterly earnings in August when it posted second quarter revenue of $574,000, with $466,000 coming from the sale of products and $108,000 from installation and training services. The company’s net loss for the quarter was $5.8 million or $0.05 per share, which compared to a loss of $5.8 million or $0.05 per share a year ago.
Profound Medical Corp closed Friday down 4.44 per cent to $0.86. Year-to-date, the stock is up 53 per cent.