Sensus Healthcare is heading back to $8.00, says Roth

Roth Capital Partners analyst Scott R. Henry provided an update on Tuesday on medical device company Sensus Healthcare (Sensus Healthcare Stock Quote, Charts, News, Analysts, Financials NASDAQ:SRTS), saying the stock may be in for a rebound.

Sensus Healthcare makes and sells radiation therapy devices to healthcare providers worldwide, including the proprietary low-energy X-ray technology superficial radiation therapy (SRT). The SRT-100 is a photon X-ray low-energy system that provides an alternative to surgery for treating non-melanoma skin cancers including basal cell and squamous cell skin cancers as well as other skin conditions such as keloids. 

The company’s share price rose sharply over the last stretch of 2021 and into 2022, going from $4 per share to as high as $14.97 before falling hard and ending up currently trading around $3. 

But Henry sees upside from these levels and has reiterated a “Buy” rating on the stock and a 12-month target of $8.00, saying its SRT tech offers a “considerably less invasive” surgery than the current standard, Mohs surgery. 

Henry said a macro slowdown has played a role in Sensus’ share price drop and higher interest rates have impacted the company’s 2023 sales, which were down 65 per cent over the first quarter. 

At the same time, the analyst pointed to Sensus’ strong balance sheet, which stands at $19 million in cash with no debt, while management is targeting cash flow positive status as of the second half of the year.

“If the company can deliver on a 2H23 resurgence, shares may be in for a rebound. Tune in for an in-depth progress report from senior management,” Henry wrote.

Henry said Roth will be hosting a webinar with Sensus management on Tuesday which will include a Q&A.

By the numbers, Henry is expecting Sensus’ revenue to go from $44.5 million in 2022 to $24.8 million in 2023 and to $39.7 million in 2024, while EPS is expected to go from $1.46 per share in 2022 to negative $0.05 per share in 2023 and to positive $0.35 per share in 2024. (All figures in US dollars.)

Sensus reported its first quarter 2023 financials in early May, where revenue came in at $3.4 million compared to $10.3 million a year earlier, with the drop attributed to lower SRT unit sales. The net loss was $1.9 million or $0.12 per share.

“Our first quarter financial results were disappointing as potential new customers delayed making SRT purchase decisions due to inflation conditions impacting their aesthetic business. Many dermatologists depend on elective aesthetic procedures as a meaningful source of practice revenue and profit, and inflation has caused consumers to pull back on these expenditures,” said Chairman and CEO Joe Sardano in a press release.