Piper Sandler has confirmed its positive stance on TELA Bio, Inc. (NASDAQ: NASDAQ:TELA), maintaining an Overweight rating and a price target of $8.00.
The company's preannouncement of $19.0 million in sales for the quarter marginally exceeded Wall Street's forecast of $18.7 million. TELA Bio also reported a gross margin (GM) of 68%, which was slightly below Piper Sandler's estimate of 68.5%.
The company has successfully navigated through second-quarter challenges at the Group Purchasing Organization (GPO) level. At the conclusion of the third quarter, TELA Bio reported having $17.3 million in cash, a decrease from the $26.5 million held at the end of the second quarter. Additionally, TELA Bio announced plans for an equity raise, the details of which have yet to be disclosed.
The prospect of an equity raise has previously cast a shadow over TELA Bio's stock. Analysts believe that the resolution of this issue could potentially allow the stock to perform better. In the third quarter, TELA Bio also undertook cost reduction initiatives that are expected to decrease operating expenses by $5.0 million to $10.0 million annually, starting in fiscal year 2025.
In other recent news, TELA Bio, a medical technology firm, announced a public offering of its common stock and pre-funded warrants, with Canaccord Genuity and Lake Street Capital Markets as joint bookrunners.
The proceeds will be directed towards various corporate purposes, including sales and marketing efforts, research and development activities, and general administrative expenses. In parallel, TELA Bio reported an 11% year-over-year revenue growth in its second quarter, reaching $16.1 million, and projects annual sales to be between $74.5 million and $76.4 million.
Analysts from Canaccord Genuity and Piper Sandler have maintained positive ratings on TELA Bio shares, despite adjusting their price targets, based on the potential for increased adoption of TELA's OviTex hernia mesh products and the company's strong international performance. TELA Bio has also introduced a new inguinal hernia repair product line, aiming to capture a broader market segment.
InvestingPro Insights
TELA Bio's recent performance and strategic moves align with several key insights from InvestingPro. The company's reported revenue of $19.0 million for the quarter reflects its strong revenue growth trend. InvestingPro data shows that TELA Bio's revenue growth over the last twelve months as of Q2 2024 was an impressive 31.64%.
However, the company faces financial challenges. An InvestingPro Tip notes that TELA Bio is "quickly burning through cash," which is evident in the decrease of cash from $26.5 million to $17.3 million in just one quarter. This cash burn rate underscores the importance of the company's planned equity raise and cost reduction initiatives.
Another relevant InvestingPro Tip indicates that "analysts do not anticipate the company will be profitable this year." This aligns with TELA Bio's current focus on growth and operational efficiency rather than immediate profitability. The company's efforts to reduce operating expenses by $5.0 million to $10.0 million annually starting in fiscal year 2025 demonstrate a strategic move towards improving its financial position.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for TELA Bio, providing a deeper understanding of the company's financial health and market position.
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