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OpSens is now very undervalued, says Raymond James

Fibreoptic sensor company OpSens Inc. (Opsens Stock Quote, Chart, News, Analysts, Financials TSX:OPS) lost a lot of ground over the past six months but Raymond James analyst Rahul Sarugaser still sees an opportunity in the name, saying the company could hit $100 million in sales within three years. In a report to clients on Thursday, Sarugaser maintained a “Strong Buy 1” rating and $6/share target price for a projected one-year return of 241 per cent at the time of publication.

Founded in 2006 and headquartered in Quebec, Opsens Inc. develops, manufactures, installs and sells fibreoptic sensors for interventional cardiology, fractional flow reserve (FFR), oil and gas and industrial applications, operating with both medical and industrial segments.

The company has developed and commercialized a suite of optical devices, including the OptoWire: a fiber optic pressure guidewire used in diagnosing and treating patients with coronary artery disease.

Sarugaser’s latest update comes after the company’s 20-patient study investigating the use of SavvyWire for use in transaortic valve replacement (TAVR) procedures was presented at the 2022 EuroPCR conference, and simultaneously published in the EuroIntervention journal.

The presentation also came on the heels of the SavvyWire officially receiving Health Canada approval in Canadian TAVR operations, as well as having been published in the Journal of the Society for Cardiovascular Angiography & Intervention ahead of the SCAI Scientific Session meeting to be held in Atlanta from May 19 to May 22.

“This data underpinned OPS’s recent Health Canada clearance of SavvyWire that gave us confidence FDA clearance is likelier than before,” Sarugaser said. “Seeing the data for ourselves, our confidence in FDA clearance in ~late C3Q22 is further emboldened. This said, given that OPS’ stock is down 50 per cent from its Nov. ‘21 high—notably, also down 25 per cent from its Health Canada approval announcement—logic would dictate that anticipated FDA clearance is not priced in to OPS’ current stock price. However, sector sentiment continues to languish, so even FDA clearance may not create the immediate price inflection we’d expect under a normal sentiment environment.”

The parameters of the prospective observational study included 20 patients with severe symptomatic aortic stenosis, which occurs when the heart’s aortic valve narrows, undergoing TAVI. In total, 12 of the patients received an Evolut PRO+ valve, while the remaining eight received a SAPIEN 3/ULTRA valve.

Every patient experienced a reduction in aortic pressure through left ventricular rapid pacing with no cases of rapid pacing failure, with transcatheter heart valve systems also being successfully deployed in all 20 patients with no reports of procedural mortality, stroke, guidewire kink, valve malposition or ventricular perforation.

The SavvyWire also did its job with no problems, while continuous and accurate recording of pressure measurements during the TAVR procedure was achieved in patients, with an excellent correlation between systolic and left ventricular end-diastolic pressure obtained using traditional pigtail catheters and the new SavvyWire.

Overall, the study showed the efficacy of the SavvyWire for adequate rapid pacing runs during TAVI procedures with balloon-expandable and self-expanding valves, with no cases of pacing capture failure. In addition, if backup pacing is required post-THV deployment, the wire length (280 cm), along with its electrical insulation properties, allows for continuous pacing while the THV delivery system is removed from the sheath and a temporary pacing lead is inserted in the right ventricle.

“We are pleased by the new positive clinical data supporting our next-generation TAVR guidewire as we enter the commercialization phase of this innovative technology in Canada,” said Louis Laflamme, President and Chief Executive Officer of OpSens in the company’s May 19 press release. “The SavvyWire is intended to simplify the TAVR intervention and facilitate the clinical decision-making process with the potential to transform the TAVR procedure.”

Sarugaser’s financial projections for the company remain intact, as he continues to forecast $36 million in revenue for 2022 to mark a potential year-over-year increase of 5.9 per cent. Looking ahead to 2023, Sarugaser forecasts a jump to $44 million for a potential year-over-year increase of 22.2 per cent.

In terms of valuation, Sarugaser forecasts the company’s EV/Revenue multiple to move minimally from the reported 4.9x in 2021 to a projected 4.8x in 2022, then dipping to a projected 3.9x in 2023.

Meanwhile, Sarugaser continues to forecast an adjusted EBITDA loss of $4 million for 2022, which he has turning positive by the same amount in 2023, paired with a revised EV/EBITDA multiple of 38.3x.

“Short-term volatility notwithstanding, we calculate that each ten per cent market share translates to approximately US$50 million in sales, so it would not be unreasonable to assume OPS reaching total revenue of approximately C$100 million by 2025,” Sarugaser said. “Given that, under normal circumstances, these stocks trade at greater than 10x EV/Revenue, we highlight OPS as a very undervalued name for any clients with a medium- to longer-term time horizon.”

Since starting the year trading at $2.93/share, Opsens has seen its share price fall by 35.2 per cent, though it has slightly rebounded since hitting a 2022 low close of $1.63/share on May 11.

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About The Author /

Geordie Carragher is a staff writer for Cantech Letter
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