On Tuesday, Baird adjusted its outlook on Penumbra, Inc. (NYSE:PEN), a healthcare company specializing in innovative medical devices. The firm's analyst reduced the price target on the company's shares to $231 from the prior $267 while maintaining an Outperform rating.
The revision follows a careful review of management's remarks at recent industry conferences, which suggested that Penumbra might struggle to meet second-quarter expectations for its Central Nervous System (CNS) segment. The analyst noted that although some investors may have preemptively adjusted their expectations based on these comments, any results that merely meet expectations or a lack of positive guidance for the second half of 2024 could be perceived unfavorably by the market.
Despite the potential for a subdued second-quarter performance, the analyst does not foresee significant downside risk to the company's full-year 2024 guidance. However, Baird's projections remain conservative, falling below the mid-point of the company's provided guidance range.
The firm anticipates that current trends are unlikely to support a significant upward revision in the latter half of 2024.
Looking further ahead, Baird remains optimistic about Penumbra's prospects. The analyst expects that the company's revenue will grow by 15% year-over-year in fiscal year 2025.
This outlook is supported by an improving profit profile and the anticipation of a new product launch in fiscal year 2026, which is projected to reinvigorate revenue growth. Based on these factors, Baird believes that Penumbra's shares have the potential to appreciate over the next 12 months.
In other recent news, healthcare company Penumbra has been the subject of recent developments. Piper Sandler, a reputable financial firm, has adjusted its price target for Penumbra, reducing it to $260 from the previous $290, while maintaining an Overweight rating on the company's stock.
This adjustment comes after Penumbra disclosed its first-quarter results, which were largely positive, and reaffirmed its full-year guidance. Piper Sandler has also noted improvements in Penumbra's profit margins and anticipates that the company's recent investments will result in gains.
In terms of earnings and revenue, Penumbra reported a robust first quarter for 2024 with total revenues reaching $278.7 million, marking a 15.4% increase from the previous year. The company's U.S. thrombectomy revenue saw a significant surge of 35.2%, contributing to an optimistic outlook for the year. The company's management expects continued margin expansion throughout 2024 and plans to launch three new CAVT products in the next 12 months.
Despite some weaker performance in its Access and Embolization businesses, which led to the company's exit from certain non-viable markets, Penumbra remains optimistic about its future growth.
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