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  • RBC Capital Markets initiated coverage on Outset Medical Inc OM with an Outperform rating and a price target of $23.
  • The analyst writes that Outset Medical is a medical device company that offers a disruptive, first-of-its-kind technology designed to reduce the cost and complexity of dialysis – an $11 billion U.S. total addressable market for kidney failure treatment. 
  • The analyst view OM as significantly undervalued, given the opportunities ahead. 
  • RBC believes the company is poised for rapid growth given the significant cost savings associated with the Tablo hemodialysis system as it focuses on the ~$3 billion acute care sub-market and looks to leverage this advantage in the $8.5 billion home setting where there are major tailwinds.
  • It is poised to deliver 3-year and 5-year revenue CAGRs of 46% and 39%, which is among the highest in MedTech, and is poised to benefit from major healthcare tailwinds, i.e., shift to the home aided by reimbursement. 
  • Earlier this week, Outset Medical posted Q3 adjusted EPS loss of $(0.70), beating the consensus of $(0.81) with sales of $27.76 million, better than the consensus of $25.22 million.
  • The company raised 2022 revenue guidance to $111-$113 million versus the consensus of $108 million.
  • Price Action: OM shares are up 4.91% at $18.37 on the last check Friday.

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