On Tuesday, AtriCure Inc. (NASDAQ: ATRC), a company specializing in medical devices for cardiac disorders, received an upgrade from an analyst at Oppenheimer. The stock rating was raised from Perform to Outperform, and the price target was set at $32.00. The decision for the upgrade is based on a more favorable risk-reward balance at the current stock price levels.
The analyst pointed out that the upgrade is tactical, considering the stock is now trading at approximately 2.8 times forward Price/Sales (P/S), which represents about a 33% discount compared to the small-cap MedTech sector. This adjustment follows a previous downgrade when AtriCure's stock was trading at roughly 12 times forward P/S.
The neutral stance held until recently was due to several concerns, including issues with CONVERGE logistics and reimbursement, potential indication creep for the company's PFA (Pulmonary Vein Isolation) technology, competition for AtriCure's AtriClip device from Penditure, and a general slowdown in growth.
While acknowledging that some of these risks persist, the analyst sees a more appealing investment opportunity given the company's projected growth.
AtriCure is anticipated to have a Compound Annual Growth Rate (CAGR) of about 15% over the next 12 months, aligning it with the growth rates of other small-cap MedTech companies. However, AtriCure's current multiple is around a 50% discount to the sector, trading at 4.0 times forward P/S. This significant discount has led to the analyst's tactically constructive stance on the stock.
InvestingPro Insights
As AtriCure Inc. (NASDAQ: ATRC) garners attention with a recent analyst upgrade, data from InvestingPro provides additional context for potential investors. The company's market capitalization stands at approximately $1.1 billion, indicating a notable presence in the medical device sector. Despite challenges, AtriCure's revenue growth over the last twelve months as of Q4 2023 has been strong at 20.84%, outpacing many competitors in the industry.
However, the InvestingPro Tips suggest caution; the stock's performance has been underwhelming over the past month, with a 20.23% decline. This could be reflective of broader market trends or specific company challenges. Additionally, analysts are not expecting AtriCure to be profitable this year, which may be a factor for investors seeking near-term returns. On a positive note, the company's liquid assets exceed its short-term obligations, providing some financial stability.
For those considering an investment in AtriCure, it's worth noting that there are 5 additional InvestingPro Tips available that could provide deeper insights into the company's financial health and market position. To explore these tips and gain a more comprehensive understanding, visit https://www.investing.com/pro/ATRC and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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