On Friday, BTIG reaffirmed its Buy rating and $44.00 price target for shares of OrthoPediatrics Corp. (NASDAQ:KIDS), an orthopedic company focused on pediatric healthcare. The endorsement comes in anticipation of the company's first Analyst & Investor Event scheduled for September 12th, since its public offering in 2017.
OrthoPediatrics has experienced significant growth since its inception in 2008, boasting a compound annual growth rate (CAGR) of over 44% up to 2023. However, since 2014, the growth rate has moderated to approximately 23% CAGR. Despite this impressive growth, there have been fluctuations that have led investors to question the sustainability of the company's legacy portfolio of surgical products.
In recent years, specifically since 2022, OrthoPediatrics' organic growth rate has been in the mid-teens. The upcoming event aims to address investor concerns by presenting a clear rationale for the company's ability to sustain growth. The event will likely touch upon whether the company should aim for a growth rate above 20%, a figure that has historically been associated with OrthoPediatrics.
The current valuation of OrthoPediatrics stands at 2.2 times next twelve months (NTM) enterprise value to sales (EV/Sales). The Analyst & Investor Event is expected to provide clarity on the company's long-term growth trajectory and respond to key questions that could bolster investor confidence in OrthoPediatrics as a long-term growth story.
In other recent news, OrthoPediatrics has reported a surge in growth for Q2 2024, with a 52% increase in children served and a 33% rise in revenue, reaching a record $52.8 million. This growth was driven mainly by the trauma and deformity, domestic scoliosis, and specialty bracing businesses. The company remains committed to its full-year 2024 revenue guidance of $200 million to $203 million.
OrthoPediatrics also announced its future growth strategies, including new product launches and international expansion. The firm secured a $25 million term loan and additional access to a $25 million delayed draw term loan facility. A stock repurchase program of up to $5 million was also revealed.
It's worth noting that the company expects to produce $8-9 million in adjusted EBITDA in 2024 and aims to achieve cash flow breakeven by 2026. Despite some variability in revenue on a month-to-month basis, OrthoPediatrics is optimistic about growth in international markets and capturing market share.
InvestingPro Insights
As OrthoPediatrics Corp. (NASDAQ:KIDS) prepares for its Analyst & Investor Event, real-time data from InvestingPro presents a nuanced view of the company's financial health and market performance. With a market capitalization of $723.53 million and a Price/Book ratio of 1.95 as of Q2 2024, the company appears to be maintaining a solid asset valuation relative to its share price. Furthermore, a strong revenue growth of 27.7% over the last twelve months signals robust sales performance.
InvestingPro Tips indicate that analysts have recently revised their earnings estimates upwards for the upcoming period, suggesting potential optimism about the company's financial prospects. Additionally, OrthoPediatrics' liquid assets surpass its short-term obligations, providing a cushion for operational flexibility. However, it's important to note that analysts do not expect the company to be profitable this year, and it has not been profitable over the last twelve months, which may be of interest to investors seeking immediate profitability. OrthoPediatrics does not pay a dividend, which could influence the investment strategy of income-focused shareholders.
For investors seeking a deeper dive into OrthoPediatrics' financial outlook, there are additional InvestingPro Tips available at https://www.investing.com/pro/KIDS. These tips could provide further clarity on the company's potential as a long-term growth investment, particularly in the context of the upcoming Analyst & Investor Event.
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