OpSens has an 88 per cent upside, says Raymond James

Raymond James analyst Rahul Sarugaser is staying bullish on optical medical device company OpSens Inc (OpSens Stock Quote, Charts, News, Analysts, Financials TSX:OPS) after speaking with a cardiology specialist who claims OpSens’ SavvyWire instrument is set to become the “workhorse wire” in transcatheter aortic valve replacement (TAVR). Sarugaser provided an update to clients on Tuesday where he reiterated an “Outperform” rating on OpSens and $3.50 target price, which implied at press time a projected one-year return of 88 per cent.

Québec City-based OpSens is a developer of optical devices including the OptoWire, a fibreoptic pressure guidewire for diagnosis and treatment of patients with coronary artery disease, while the company recently received FDA clearance and Health Canada approval for the SavvyWire for TAVR.

Raymond James recently met with interventional cardiologist Dr. Rajiv Tayal, Director of the Cardiac Catheterization Laboratory and Structural Heart Program at The Valley Hospital (Cleveland Clinic affiliate). According to Sarugaser, Dr. Tayal said the use value of the three-in-one SavvyWire reduces the complexity of TAVR cases by limiting the number of wire exchanges in a procedure and by eliminating the need for both a right ventricle pacemaker and a closure device at the venipuncture site. That would help make the learning curve for SavvyWire “just one or two cases,” Dr. Tayal said.

Dr. Tayal estimated the SavvyWire would be applicable in between 70 and 80 per cent of TAVR cases and he expects the device to take off and leave other competitors behind due to its broadened utility. 

At the same time, Dr. Tayal sees the TAVR market to keep expanding, which is a different take from what Sarugaser had only recently depicted in a February 7 note.

“We had previously identified the TAVR market as slowing, potentially; however Dr. Tayal expects the TAVR market to continue growing rapidly, particularly due to the under-diagnosis of aortic stenosis (AS), specifically as TAVR is now indicated for a moderate and asymptomatic AS (versus severe, at first),” Sarugaser wrote.

“Further, with respect to both TAVR and other potential cardiac markets, Dr. Tayal expects SavvyWire’s strong safety profile combined with its unique hemodynamic measurement capabilities will drive its wide adoption,” he said.

“Given SavvyWire enables real-time pressure measurement, [Dr. Tayal] expects OPS’ device to be rapidly adopted, and that ‘others will try playing catch up when they see how fast SavvyWire will be adopted,’” Sarugaser wrote.

By the numbers, Sarugaser is forecasting OpSens to generate full 2023 revenue of $44 million and rising to $59 million for 2024. On EBITDA, he is calling for negative $15 million in 2023 and negative $12 million in 2024.