OpSens is over a double from here, says Raymond James

Another solid quarter from medical device name OpSens Inc (OpSens Inc Stock Quote, Charts, News, Analysts, Financials TSX:OPS) has Raymond James analyst Rahul Sarugaser staying bullish on the stock. Sarugaser reiterated an “Outperform” rating and $3.50 target price in a Thursday review of the company’s latest quarterly numbers.

Québec City-based OpSens develops and commercializes optical devices including the OptoWire fibre optic, pressure guidewire used in the diagnosis and treatment of patients with coronary artery disease. The company is also developing devices for structural cardiology applications such as trans-aortal valve replacement (TAVR).

The company reported its second quarter fiscal 2023 financials on Thursday for the period ended February 28, 2023, featuring consolidated revenues up 33 per cent year-over-year to $10.8 million, representing a new quarterly record.

Sales of coronary artery disease products were up 23 per cent year-over-year to $5.7 million, while sales of optical medical products were up 43 per cent to $3.4 million. Structural heart sales for the TAVR were $0.5 million.

“We continue to make significant progress for our proprietary devices, with OptoWire sales, up 30 per cent in the U.S. compared to quarter two 2022, and SavvyWire sales increasing 31 per cent on quarter one fiscal year 2023,” said president and CEO Louis Laflamme in a press release. 

“Following FDA clearance and the current controlled market release for SavvyWire, we are now ramping up our commercialization of this revolutionary concept in Structural Heart. This, along with our new GPO agreement, provides a solid platform for our next stage of commercialization to drive continuous incremental growth in the coming quarters,” he said.

Looking at the Q2 numbers, Sarugaser said the $10.8 million topline was in-line with his forecast also at $10.8 million and the consensus at $10.5 million, while EBITDA at negative $2.2 million was a beat of the Raymond James forecast at negative $4.0 million and the Street’s call at negative $3.0 million.

“OPS delivered another solid quarter of increasingly high-margin sales (~57 per cent gross margins), with each major business segment delivering incremental sequential gains, and 20-30 per cent year-over-year gains,” Sarugaser wrote. 

“Notably OPS does appear to have found a new >$5.0 million/Q Rev. level in its OEM/optimal medical product supply business segment, owing to higher demand from AbioMed/JNJ. And, even while SavvyWire is in a restricted market release phase, OPS managed to drive $0.5 million in sales into the structural heart/TAVR market,” he said.

Looking ahead, Sarugaser has forecasted full fiscal 2023 revenue and EBITDA of $44.3 million and negative $11.6 million, respectively, and 2024 revenue and EBITDA of $59.8 million and negative $9.3 million, respectively. Further along, Sarugaser sees OpSens’ revenue hitting $113.7 million by fiscal 2027 and $171.5 million by fiscal 2030.

At press time, Sarugaser’s maintained $3.50 target represented a projected one-year return of 106 per cent.