Shares of medical device provider AtriCure are a lucrative investment opportunity, according to JMP Securities. Analyst Daniel Stauder initiated coverage of the stock with an outperform rating and a price target of $60, suggesting that the shares could increase by almost 70%. Stauder stated that AtriCure is the leading player in treating complex forms of atrial fibrillation (Afib) and has established a dominant position in two major cardiac arenas that continue to grow significantly. He also highlighted the company’s efforts to drive operating leverage and achieve positive adjusted EBITDA, which align well with the current MedTech landscape.
AtriCure develops, manufactures, and sells devices for the treatment of Afib, left atrial appendage management, and post-operative pain. These devices are targeted towards medical centers. Although the company’s stock price has declined by approximately 19% this year, the majority of the decrease occurred in the current quarter. On Monday, the stock briefly rose by 4.8% during early trading before retracting.
Stauder emphasized that AtriCure has recently ventured into two emerging opportunities that offer larger total addressable markets than its traditional niche. One of these opportunities is the company’s Open Ablation products, which are the only FDA-approved technologies for treating persistent Afib. The other is the AtriClip product, which is the most widely used device for left atrial appendage management and has demonstrated benefits in preventing blood clots and stroke. Stauder noted that both segments account for approximately 35% and 40% of total sales, respectively, and are projected to experience mid-teen annual sales growth in 2024 and 2025.
Additionally, Stauder identified AtriCure’s fast-growing post-operative pain management division as another significant growth opportunity. With a potential total addressable market nearing $1 billion, this segment is expected to expand by around 20% year-over-year in 2023, 2024, and 2025. Currently, it contributes 12% to the company’s revenue, up from 5% in 2020. Stauder believes that AtriCure’s pain management division will offer an attractive layer of growth that surpasses the company’s legacy product portfolios.
In conclusion, JMP Securities’ analysis highlights the potential for substantial growth in AtriCure’s stock. The company’s strong position in the treatment of complex forms of Afib, as well as its expansion into emerging opportunities, provides a promising outlook for investors. Furthermore, its post-operative pain management division presents an additional avenue for significant growth.
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