CapsoVision is a buy, this analyst says

Roth Capital Markets initiated coverage of CapsoVision (CapsoVision Stock Quote, Chart, News, Analysts, Financials NASDAQ:CV) with a “Buy” rating and $6.00 price target, citing strong growth potential. In his July 28 report, Roth analyst Jason Wittes said, “The company is on track for 19.5% growth in 2025 with its initial small bowel indication,” adding that a recent 510(k) submission for the larger colon market could “significantly boost revenue growth in 2026 and beyond.”

CapsoVision, founded by Kang-Huai Wang in 2005 and based in Saratoga, California, develops capsule endoscopy technology for gastrointestinal screening and diagnosis, with a focus on advanced imaging and AI integration.

“Artificial intelligence is poised to significantly transform capsule endoscopy by improving clinical outcomes, enhancing workflow efficiency, and increasing cost-effectiveness, addressing many of the current barriers to widespread adoption,” Wittes said. “CapsoVision appears uniquely positioned to capitalize on this shift, with plans to launch its internally developed, proprietary AI platform by year-end. Unlike many competitors working with lower-quality images and fragmented datasets, CapsoVision’s platform leverages high-resolution imaging and a centralized, high-quality image database, offering a distinct technological advantage.”

He said CapsoVision is moving into the $10-billion colon screening market, with a new pill version submitted for 510(k) approval, following the 2022 launch of its small bowel product.

“We expect approval by year-end, and an addendum for a next-generation version by mid-next year, paving the way for a 2H26 launch,” he said. “The company also looks to expand into pancreatic, anticipating gaining breakthrough designation later this year, and plans to initiate trials for pancreatic and esophageal by early next year.”

CapsoVision’s CapsoCam Plus device has posted steady gains, with revenue growing at an average rate of 20% year-over-year since 2021.

“We anticipate a meaningful boost from FDA 510(k) clearance for the integration of AI technology into CapsoCam Plus by the end of 2025, along with expected approval of the company’s patency capsule,” Wittes said. “We assume small bowel revenue growth of 19% year-over-year in 2025, accelerating to 25% in 2026, and stabilizing at a 22% annual growth rate through 2029. From a geographic perspective, we expect revenue growth in the US to be 17% year-on-year in 2025, which accelerates to 26% in 2026, and stabilizes at 23% through 2029. For the international revenues in the small bowel market, we assume a 28% year-over-year growth rate in 2025, which we expect will decelerate to 22% in 2026 and stabilize at 20% annually through 2029.”

Wittes said Roth’s estimates assume CapsoCam Colon, which includes the company’s AI technology, will launch commercially in the second half of 2026.

“We further assume that the FIT requirement will be removed and will be implemented as early as 2027, thereby doubling the applicable reimbursable population,” he said. “In 2026, we estimate that CapsoVision captures roughly 1.1% of the patients who are unable to have a colonoscopy or have had a failed one, reflecting a total of roughly 27,000 CapsoCam Colon procedures.”

Wittes estimates a 2.0% U.S. capture rate for CapsoCam Colon in 2027, totalling 50,200 procedures, with $16.2-million in 2026 revenue growing 93% in 2027, 85% in 2028, and 31% in 2029. International sales are projected to begin in 2027 at $2-million, doubling in 2028 and rising 75% in 2029.

“Based on these assumptions, we estimate that CapsoVision will generate $14-million of revenues in 2025 and $33.8-million in 2026,” he said. “We also anticipate CapsoVision’s first year of profitability will occur in 2028, following the commercial launch of its AI-integrated small bowel and colon capsule endoscopy systems, the approval and rollout of its patency capsule, and the elimination of the FIT requirement.”

Wittes is forecasting operating expenses of $32.5-million for 2025, up from $26.3-million in 2024.

“This assumes roughly $15-million for R&D attributable to colon regulatory submission and ongoing clinical evaluation. We are estimating S&M of $8.5-million as the company currently has a direct salesforce of 25 people in the US, in addition to distributors overseas. Our G&A assumption is ~$9-million, and we anticipate growth in later years to build out the infrastructure. In all, we expect an operating loss of $24.7-million for 2025.”

Wittes expects CapsoVision to post a $10.6-million operating loss in 2026, with operating expenses of $35.4-million, driven by $15.6-million in R&D, $9.1-million in sales and marketing, and $7.4-million in G&A. He also projects $15.1-million in cash burn for the year, following $25-million in 2025. The company ended 2024 with $9.3-million in cash.

“We anticipate profitability at a $5-million revenue run rate, which should be reached by the end of 2027,” he said. “Assuming the company does not cut back on clinical development, additional capital raises may be required.”

-30-