Profound Medical cut to Hold at Jefferies on valuation
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- Jefferies downgraded Canadian medical device company Profound Medical (NASDAQ:PROF) to Hold from Buy on Tuesday, citing concerns on valuations and a lower-than-expected demand for its Tulsa-Pro prostate cancer procedure.
- Profound (PROF) announced this month that a CPT Category 1 application for Tulsa-Pro, which is important for payer reimbursement, will be considered at the upcoming CPT Editorial Panel Meeting in May.
- However, Jefferies analyst Michael Sarcone argues that while the company could receive approval for the CPT application in early May/June, the decision will take effect in Q1 2025.
- “Approval is an important milestone but code effectiveness is ~2 years away,” the analyst wrote, projecting a more gradual near-term demand for Tulsa than indicated in the consensus.
- “We would look for a better entry point, more achievable consensus estimates, and closer proximity to permanent reimbursement before becoming more constructive,” Sarcone added, while raising the price target on PROF to $10 from $5.50 to account for higher peer multiples.
- Read: Seeking Alpha contributor Zach Bristow upgraded Profound Medical (PROF) to Buy from Hold in February.