Rockwell Medical: Long-Term Contracts and Product Mix Shift Support Margin Expansion and $2.50 Upside Target

Ram Selvaraju, an analyst from H.C. Wainwright, reiterated the Buy rating on Rockwell Med. The associated price target remains the same with $2.50.

Ram Selvaraju has given his Buy rating due to a combination of factors that, in his view, enhance Rockwell Medical’s revenue visibility and growth prospects. He highlights the extension of the key product purchase agreement with DaVita through the end of 2026, noting that this not only locks in an important strategic customer but also incorporates higher pricing, which should support more predictable and potentially growing top-line revenue. In addition, he points to the company’s success in signing and expanding long-term supply contracts with university medical centers, kidney centers, hospital systems, and major dialysis providers, indicating that over four-fifths of Rockwell’s customer base is now under longer-duration agreements.

Selvaraju also emphasizes that these long-term contracts, including minimum purchase commitments and the inclusion of newer products such as the bicarbonate cartridge, are likely to shift the company’s product mix in a way that supports gradual improvement in gross margins beginning this year. From a valuation standpoint, his discounted cash flow analysis implies upside to the current share price, yielding a firm value that translates into a $2.50 price target based on projected cash flows and capital structure assumptions. While he acknowledges risks such as execution challenges, commercial hurdles, and partnership dependencies, he concludes that the risk-reward profile remains favorable, underpinning his continued Buy recommendation on Rockwell Medical shares.