On Tuesday, Jefferies began coverage on RxSight Inc. (NASDAQ:RXST) stock by assigning a Buy rating and setting a price target of $72.00. The firm highlighted the company's unique position in the market as the producer of the first and only post-surgery adjustable intraocular lens (IOL) designed to correct cataracts, which is seen as a significant technological advancement.
The analyst from Jefferies pointed out that RxSight's technology is not only differentiated but also considered best in class, potentially expanding the addressable market for premium IOLs (AT-IOL) and allowing the company to increase its market share. Currently, RxSight holds a 10% share in the U.S. and a 3% share worldwide, but the analyst forecasts potential growth to over 50% in the U.S. market over the long term.
The optimism around RxSight's growth is supported by proprietary surveys and checks with surgeons, which suggest that the company's growth could outpace consensus estimates starting from the year 2025 and beyond. This positive outlook is further bolstered by the expectation that RxSight's EBITDA will become positive by the second half of 2026.
The $72 price target set by Jefferies reflects confidence in RxSight's future performance and market potential. The analyst's statement encapsulates the firm's perspective: "RXST makes the first and only post surgery adjustable IOL to resolve cataracts. The differentiated and best in class tech enables premium IOL (AT-IOL) TAM expansion, and share taking, from 10% US (3% WW) share to 50%+ US LT.
While our survey and checks don't focus explicitly on 3Q, the proprietary survey and surgeon checks suggest above cons growth for '25E+. We also expect EBITDA to turn positive by 2H26. We initiate at Buy with a $72 PT."
In other recent news, RxSight Inc. reported a significant 68% increase in revenue for the second quarter of 2024, reaching $34.9 million, largely driven by the successful sales of their Light Adjustable Lens (LAL) units and Light Delivery Devices (LDDs). Encouraged by this growth, RxSight increased its full-year revenue guidance for 2024.
Stifel, BTIG, and Needham, prominent analyst firms, have maintained their Buy ratings on RxSight's stock, reflecting their confidence in the company's growth trajectory. Stifel anticipates RxSight will surpass sales estimates, predicting a robust beat with sales ranging between $37 million and $38 million.
Additionally, RxSight has achieved FDA approval for an extension of the spherical refractive power range for the LAL+, expected to enhance commercial distribution by the end of 2024. Despite the complexities of different European markets, the company is committed to expanding its international regulatory approvals. These are recent developments surrounding RxSight Inc.
InvestingPro Insights
RxSight's market performance and financial metrics offer additional context to Jefferies' bullish outlook. According to InvestingPro data, the company's market capitalization stands at $1.99 billion, reflecting significant investor interest. RxSight has demonstrated impressive revenue growth, with a 71.9% increase over the last twelve months as of Q2 2024, aligning with Jefferies' expectations for market expansion.
InvestingPro Tips highlight that RxSight holds more cash than debt on its balance sheet and has liquid assets exceeding short-term obligations, suggesting financial stability as it pursues growth. The company's strong return over the last year, with a one-year price total return of 136.03%, indicates market confidence in its potential.
However, it's worth noting that RxSight is not currently profitable, with a negative operating income margin of -36.79%. This aligns with the InvestingPro Tip that analysts do not anticipate the company to be profitable this year, supporting Jefferies' projection of positive EBITDA by the second half of 2026.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips for RxSight, providing a deeper understanding of the company's financial health and market position.
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