Paragon 28, Inc. (NYSE: FNA) has experienced a revision in its stock outlook as Needham set a lower price target on the company's shares. The target was adjusted to $11.00, down from the previous $14.00, while the firm sustained a Buy rating for the stock.
The second quarter of 2024 saw Paragon 28's revenue and EBITDA surpassing consensus estimates, with revenue growth accelerating to 20% in constant currency (CC) terms, up from 17% CC in the first quarter of 2024.
Despite this growth, management described the quarter as "choppy," noting variability in performance from week to week. Consequently, the company has revised its annual revenue guidance downward.
Amid these developments, Paragon 28 announced the appointment of Chadi Chahine as the new Chief Financial Officer (CFO). In addition, the company is undertaking a cost reduction initiative, which includes trimming its workforce by 7%. These measures are part of Paragon 28's strategic efforts to achieve positive EBITDA in 2025 and positive cash flow by 2026.
Needham's revision of the price target is attributed to a reduced sales estimate for 2025 and a slower projected revenue growth for Paragon 28. The quarter's results were deemed mixed by the firm, recognizing the strong growth in the second quarter and the potential benefits of cost reductions, while also taking into account the lowered guidance and the current market conditions.
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