Baird has maintained its Outperform rating on Penumbra (NYSE: NYSE:PEN) and increased the price target to $244 from the previous $180.
The firm's analyst expects Penumbra to achieve third-quarter results that align with or slightly surpass expectations for the Central Nervous System (CNS) segment, despite the company's previously lowered guidance for the quarter.
Penumbra's performance for the full year 2025 remains uncertain, with no clear indicators of potential growth acceleration beyond the second half of 2024.
Baird's current model forecasts a 13% growth for fiscal year 2025, compared to the 9-10% growth rates projected for the exit rates of the second half of 2024.
The analyst noted that Penumbra's stock is trading at the higher end of its comparative group, with an enterprise value to sales ratio of 5.5 times the 2025 estimates, against a range of 4 to 6 times for its competitors. This valuation comes despite Penumbra's lower growth outlook, which is more evident when considering the 2025 price-to-earnings ratio of 55 times.
The report suggests that while a third-quarter performance in line with expectations may bolster some investor confidence, it is unlikely that Penumbra's share price will see significant movement post the third-quarter results.
This is due to the challenges in predicting the company's growth trajectory and the stock's current valuation relative to its peers.
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