Outset Medical’s Growth Potential: Buy Rating Despite Q3 Challenges

Josh Jennings, an analyst from TD Cowen, maintained the Buy rating on Outset Medical. The associated price target is $15.00.

Josh Jennings has given his Buy rating due to a combination of factors that highlight Outset Medical’s potential for future growth despite recent challenges. The company experienced a slight miss in Q3 revenue expectations, primarily due to order timing issues that affected consumable sales and recurring revenue. However, there was an 8% growth in console sales, and the company has seen an acceleration in consumable sales in Q4, indicating a positive trend.
Additionally, Outset Medical has demonstrated strong treatment utilization and maintained disciplined pricing strategies for its products. The company’s gross margins have improved, with product gross margin reaching 45.7% and service and other gross margin increasing to 24.8% from the previous year. Despite a slight increase in the adjusted net loss per share compared to estimates, the company has managed to reduce operating expenses significantly, using less than $6M of cash during Q3. These factors contribute to Jennings’s confidence in the company’s ongoing turnaround and potential for future success.

Jennings covers the Healthcare sector, focusing on stocks such as Medtronic, TransMedics Group, and Boston Scientific. According to TipRanks, Jennings has an average return of 0.6% and a 46.39% success rate on recommended stocks.