A Baird analyst has adjusted the price target on iRhythm Technologies (NASDAQ: IRTC) to $100 from the previous $110 while keeping an Outperform rating on the stock.
The revision follows a consideration of potential delays in the 510(k) clearance for the company's products, which could be perceived negatively by the market. Despite this, the analyst noted that the stock's recent performance has set up a favorable entry point into the quarter.
The analyst anticipates that iRhythm Technologies is likely to meet or slightly exceed third-quarter CNS estimates, which predict approximately 18% revenue growth.
The focus for investors, according to the analyst, will likely be on any updates from the management regarding the ZioAT 510(k) catch-up submissions.
At the recent Baird Conference, the company's management indicated that the 510(k) catch-up timelines were on track for a resolution around September or October.
The market is closely watching for the company's press release on the clearance, as this would precede any updates on the FDA's website. If no press release is issued by the time of the early-November earnings report, it may suggest a delay in the clearance process. Such a delay could also affect the submission and clearance of ZioMCT.
In other recent news, iRhythm Technologies has been the subject of several pivotal developments. The company reported a substantial 19.3% year-over-year revenue growth, reaching $148 million, prompting an updated revenue forecast for 2024 of between $580 and $590 million. In addition, the company expanded its Zio monitor and service to Austria, the Netherlands, Spain, and Switzerland.
iRhythm also entered into an exclusive licensing agreement with BioIntelliSense, Inc., enhancing its ambulatory cardiac monitoring offerings. In regulatory news, the company's Zio ECG monitoring system received approval from the Japanese Pharmaceutical and Medical Device Agency, marking a significant milestone.
Analyst coverage of iRhythm has been mixed. Goldman Sachs initiated coverage with a neutral rating, citing potential risks that could impact financial performance. Canaccord Genuity, however, maintained a Buy rating and increased the price target to $137, viewing the recent stock price decline as a buying opportunity for long-term investors.
InvestingPro Insights
Recent InvestingPro data provides additional context to Baird's analysis of iRhythm Technologies (NASDAQ:IRTC). The company's market cap stands at $1.81 billion, with a revenue of $537.09 million for the last twelve months as of Q2 2024, showing a growth of 18.81%. This aligns with Baird's expectation of approximately 18% revenue growth for the third quarter.
However, InvestingPro Tips highlight some challenges. The stock has fallen significantly over the last three months, with a 41.24% price decline, and is currently trading near its 52-week low. This recent performance supports Baird's observation of a potentially favorable entry point for investors.
Despite the revenue growth, iRhythm is not currently profitable, with an adjusted operating income of -$100.96 million for the last twelve months. An InvestingPro Tip indicates that analysts do not anticipate the company to be profitable this year, which underscores the importance of the potential revenue growth acceleration in FY25 mentioned by Baird.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for iRhythm Technologies, providing a deeper understanding of the company's financial position and market performance.
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