RBC Capital Markets initiated coverage on Outset Medical IncOM with an Outperform rating and a price target of $23.
The analyst writes that Outset Medical is a medical device company that offers a disruptive, first-of-its-kind technology designed to reduce the cost and complexity of dialysis – an $11 billion U.S. total addressable market for kidney failure treatment.
The analyst view OM as significantly undervalued, given the opportunities ahead.
RBC believes the company is poised for rapid growth given the significant cost savings associated with the Tablo hemodialysis system as it focuses on the ~$3 billion acute care sub-market and looks to leverage this advantage in the $8.5 billion home setting where there are major tailwinds.
It is poised to deliver 3-year and 5-year revenue CAGRs of 46% and 39%, which is among the highest in MedTech, and is poised to benefit from major healthcare tailwinds, i.e., shift to the home aided by reimbursement.
Earlier this week, Outset Medical posted Q3 adjusted EPS loss of $(0.70), beating the consensus of $(0.81) with sales of $27.76 million, better than the consensus of $25.22 million.
The company raised 2022 revenue guidance to $111-$113 million versus the consensus of $108 million.
Price Action: OM shares are up 4.91% at $18.37 on the last check Friday.
