Tuesday, Lake Street Capital Markets initiated coverage on shares of Pulmonx Corp. (NASDAQ:LUNG) with a Buy rating and set a price target of $12.00. The firm's assessment follows a significant drop in the company's stock value, which fell by 50% after the announcement of a CEO change. Despite the uncertainty often associated with executive turnover, Lake Street's analysis suggests that the market reaction may be an overcorrection.
According to the firm, Pulmonx's position as one of the projected top 20 fastest growing medical device companies in the U.S. contrasts with its current market valuation, which is below half the average forward EV/Revenue multiple of its peers. Lake Street Capital Markets sees this as an opportunity for the stock to realign with comparable companies as investor confidence is bolstered by strong performance.
The firm's outlook for Pulmonx is optimistic, anticipating that successful execution of the company's strategies will lead to improved investor sentiment. This, in turn, is expected to drive up the stock's valuation to a level more consistent with its industry counterparts.
Lake Street Capital Markets based their price target on a 5x 2025 EV/Revenue multiple, indicating a belief in the company's growth potential and future revenue. This target represents a significant increase from the current trading price and reflects confidence in the company's fundamental strengths and market position.
In summary, Lake Street Capital Markets has taken a positive stance on Pulmonx Corp., recommending a Buy rating with a $12.00 price target. The firm points to the company's growth prospects and undervaluation relative to its peers as key factors supporting this bullish outlook.
In other recent news, Pulmonx Corp. reported a 30% increase in its first-quarter revenue, reaching $18.9 million. This was slightly above the consensus estimate of $18.0 million and marginally below Canaccord Genuity's projection of $18.8 million.
The company's earnings per share (EPS) for the quarter was reported at ($0.36), significantly better than both Canaccord's estimate of ($0.48) and the consensus of ($0.47). Canaccord Genuity subsequently revised its outlook for Pulmonx, lowering the price target to $15 from the previous $16, while maintaining a Buy rating on the shares.
Under the new leadership of CEO Steve Williamson and CFO Mehul Joshi, the company confirmed the continuation of its existing commercial strategy. Despite the lowered price target, Canaccord maintains a positive outlook on Pulmonx's stock, highlighting the company's ongoing commercial efforts in the U.S. and its post-approval study in Japan.
The company remains confident in meeting its full-year revenue guidance of $81 million to $84 million, supported by the expansion of its Zephyr Valve treatment centers and strategic initiatives. Pulmonx's first-quarter performance signals a strong year ahead, driven by increased adoption of its Zephyr Valve treatment and strategic market expansion efforts. These are the recent developments that investors should be aware of.
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