Profound Medical stock. Raymond James explains why you should own it

Raymond James analyst Rahul Sarugaser has assigned a rare and bullish designation to Profound Medical (Profound Medical Stock Quote, Chart, News, Analysts, Financials NASDAQ:PROF).

In a research update to clients June 10, the analyst maintained his “Strong Buy” rating and price target of $19.00 on PRN. The analyst explained that he now regards the stock as above most all others in terms of risk/reward.

“We have added PROF as our Analyst Current Favorite (ACF), a designation we use to flag a single stock in our coverage list which has an imminent, fundamentals-driven catalyst ahead. (The last time PROF was our ACF pick [Nov. 2022]—predicated on the AMA’s issuance of 3 new CPT-1 codes [May 2023])—the stock yielded a ~300% return over 6 months),” Sarugaser explained. “To this end, our current ACF designation is predicated on a base case scenario (85% odds) wherein, by the end of Jul. 2024, we estimate CMS will assign pricing to these 3 new CPT-1 codes in the ballpark of robotic surgery: $18k. Given TULSA’s materially better (and long-proven) safety outcomes—we should begin seeing head-to-head TULSA vs. RP data from the CAPTAIN trial in mid-2025—we believe TULSA will begin establishing itself as standard-of-care treatment for all stages of localized prostate cancer (BPH through salvage, see PR). As such, we reiterate our Strong Buy rating.”

The analyst says there remains one outstanding question right now.

“The one remaining variable upon which the above thesis rests: CMS’s pricing for TULSA’s 3 new CPT-1 codes,” he argued. “This variable will be determined in late July, just ~6 weeks from now. We laid out a scenario analysis on this topic (Bull/Bear: CMS Pricing TULSA in July…) and reiterate our key findings below. In sum, we estimate a base case (85% odds) where TULSA’s reimbursement lands in the ballpark of RP: ~$18k. Our bull case (10% odds) recognizes TULSA’s superior adverse event (AE) profile vs. RP (incl. LT savings associated with no incision and no required hospital stay), potentially motivating CMS to apply a premium reimbursement rate to TULSA (~$20-25k). Our bear case (5% odds) has CMS starting TULSA reimbursement at the C-code’s (C9734) ~$13k level.”