Tuesday, Baird has increased the stock price target for Inari Medical Inc. (NASDAQ:NARI) to $66 from the previous $63, while maintaining an Outperform rating on the stock. The firm anticipates that Inari Medical will surpass expectations and raise its forecast for the third quarter. This adjustment is predicted to elevate the stock's value, particularly as it is currently near what is considered a trough valuation.
The stock has experienced downward pressure following the second quarter as competition in the market has intensified. Baird's analysis suggests that this competitive environment may not be fully accounted for in the company's fundamental business performance.
The firm expects that if Inari Medical's management can confirm their intention to sustain growth rates above 20% following a strong third-quarter performance, the stock's valuation multiple could see a significant increase post-Q3.
Baird also notes that despite the potential for increased value, persistent short selling pressure could restrict any lasting expansion in the stock's multiple. The outlook for the stock is likely to become clearer once the fiscal year 2025 guidance is considered less risky and the goal for positive profits in the first half of 2025 approaches.
In other recent news, Inari Medical recently released its second-quarter earnings report, highlighting a modest revenue beat and a raised forecast, reflecting a 17% growth in its core US Venous Thromboembolism business. However, the reported operational loss was larger than expected. On the management front, Kevin Strange is set to replace Mitch Hill in an unexpected Chief Financial Officer transition.
In the realm of analyst ratings, Needham maintained a Hold rating on Inari Medical in anticipation of upcoming clinical trial results. The PEERLESS study results, comparing Inari's FlowTriever system to traditional treatments for pulmonary embolism, are eagerly awaited. Stifel initiated coverage on Inari Medical with a Hold rating, acknowledging potential market growth against competitive and regulatory challenges.
Deutsche Bank reiterated a Buy rating, expressing confidence in Inari Medical's growth potential despite recent safety concerns. Truist Securities adjusted its price target for Inari Medical, decreasing it to $55 from the previous $60, while maintaining a Hold rating. Piper Sandler reaffirmed a Neutral rating, following a recent animal study investigating the company's FlowSaver technology. These are among the recent developments for Inari Medical.
InvestingPro Insights
To complement Baird's analysis, InvestingPro data offers additional insights into Inari Medical's financial position. The company's revenue growth remains strong, with a 24.67% increase over the last twelve months as of Q2 2024. This aligns with Baird's expectation of growth rates above 20%. Moreover, Inari Medical boasts an impressive gross profit margin of 87.15%, indicating efficient cost management in its core operations.
However, investors should note that Inari Medical is currently not profitable, with a negative operating income margin of -3.76%. This context adds importance to Baird's mention of the company's goal for positive profits in the first half of 2025.
InvestingPro Tips highlight that three analysts have revised their earnings downwards for the upcoming period, and net income is expected to drop this year. These tips provide a more cautious perspective on the company's near-term financial performance, which may explain the recent downward pressure on the stock noted in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Inari Medical, providing a deeper understanding of the company's financial health and market position.
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