Still more upside to Profound Medical, says Raymond James

Medical technology company Profound Medical (Profound Medical Stock Quote, Charts, News, Analysts, Financials NASDAQ:PROF) has had a superb couple of months, going for well over a double since late October. But investors can still expect a strong 2023 from PROF, according to Raymond James analyst Rahul Sarugaser, who sees a catalyst-rich future ahead. Sarugaser delivered a Company Comment on Profound on Thursday, where he reiterated a “Strong Buy 1” rating and underlined Raymond James’ recent nomination of Profound Medical as one of its 2023 Analysts’ Best Picks.

Profound, a commercial-stage medical device company, is in the process of commercializing for the US market its TULSA-PRO technology, which combines real-time MRI, robotically-driven transurethral ultrasound and closed-loop temperature feedback control and is being used on prostate cancer. The company also has Sonalleve, a platform for treating uterine fibroids and palliative pain treatment of bone metastases. 

On its financials, Profound announced third quarter results last month which featured $2.0 million in revenue compared to $2.5 million a year earlier and a net loss of $5.0 million compared to a loss of $6.0 million a year ago. (All figures in US dollars.)

Along with installations of the TULSA-PRO, Profound is furthering the clinical footing for the treatment, which makes up part of the catalyst agenda for the stock, according to Sarugaser.

The analyst pointed out the following potential catalysts: 

• data on the TULSA-PRO versus surgery, to be presented at the European Association of Urologists meeting in March, 2023. “We expect this FARP trial data to be an important catalyst, as it should provide a preview of PROF’s CAPTAIN data, expected ~mid-2024,” Sarugaser wrote;
• CPT-1 reimbursement approval, expected in May, 2023 after an expected application submission in February. Sarugaser called this PROF’s “most important upcoming catalyst”;
• The company’s 2023 year-end installation count, which should be at around 55, making for a $12 million revenue run rate at the conservative end, according to Sarugaser;
• 12-month data from Profound’s CAPTAIN trial on the TULSA-PRO versus radical prostatectomy, due in June 2024;
• 2024’s year-end installation numbers;
• CPT-1 reimbursement commences in January 2025

Sarugaser wrote, “We recently added Profound Medical to our 2023 Analysts’ Best Picks, and, since our Nov. 3 note in which we raised our rating to Strong Buy and added PROF to our Analyst Current Favourites (ACF) list—we have seen PROF’s stock return 117 per cent.”

“This recent strength notwithstanding, which we expect to contribute to significant near-term volatility (a good thing in our minds, as it has improved PROF’s liquidity: daily volume now ~doubled to ~100k), we reiterate our Strong Buy rating, and $15 target rating based on our two-year thesis,” he said.

At the time of publication, Sarugaser’s $15.00 target represented a projected one-year return of 68 per cent.