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Is beaten down PROF stock a buy now?

PROF stock

Buy the stock on weakness. That’s the advice from Raymond James analyst Michael W. Freeman on Profound Medical Corp. (Profound Medical Stock Quote, Chart, News, Analysts, Financials NASDAQ:PROF).

“Here we address recent weakness in PROF stock and highlight catalysts to expect through 2025,” the analyst wrote. “PROF was down (18%) vs. Nasdaq (0.2%) since the time of its US$40.25 mln financing on Dec. 10: sold at $7.50 US, and PROF closed at $6.25 US last night, so we’re getting plenty of questions from the 40 or so institutions that recently opened positions here. Recall, PROF’s TULSA PRO device is, in our view, the most versatile and safest treatment for prostate disease (including cancer) available on the market, and is, since Jan. 1, fully covered by CMS reimbursement. PROF’s US TAM in prostate cancer is ~US$1.6 bln, and ~US$3.2 bln if we add benign disease (BPH).”

In a research update to clients January 30, Freeman maintained his “Strong Buy 1” rating on PROF. He thinks the company will post 2024 revenue of $11.0-million, growing to $40.0-million in fiscal 2025.

Freeman says the slow adoption curve of med tech may be surprising to some investors, but reminds that there is nothing fundamental driving the recent pullback.

“We think the market developed an expectation that TULSA installations would quickly ramp after its attractive CMS reimbursement took force this January,” the analyst added. “The company has never guided this, and a more typical med tech adoption curve shows relatively modest growth in the first year after reimbursement, which then advances to the steep part of the hockey stick in year two, roughly when commercial payors begin covering 100% of the population at roughly 1.5 to 2.0x the rate of CMS. This is when a technology has the potential to become the standard of care, which we think the TULSA will be once it signs with a few big payors, potentially in late 2025. We previously studied the growth of PROCEPT Biorobotics’ (PRCT-Nasdaq)—PRCT markets Aquablation therapy to treat benign prostatic hyperplasia (BPH)—which drove revenue doublings every year after CMS reimbursement hit for the following 3 years (FY24 consensus estimates at US$224 mln). Mapping this trajectory onto PROF corresponds with material revenue inflection beginning FY26.”

About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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