On Tuesday, BTIG adjusted its outlook on Tactile Systems Technology (NASDAQ:TCMD) shares, reducing the price target to $16 from the previous $17 while retaining a Buy rating.
The revision follows the company's second-quarter results for the fiscal year 2024, which showed revenues of approximately $73.2 million. This figure is slightly below BTIG's estimate of $73.4 million but above the general market expectation of $72.8 million.
The company's full-year 2024 revenue guidance was revised downward by about $7 million to a new range of $293 million to $298 million, representing a year-over-year growth of 7% to 9%. This adjustment was attributed to increased Medicare documentation requirements that have slowed down sales in the Lymphedema segment.
Despite this, Tactile Systems raised its adjusted EBITDA forecast to between $34 million and $36 million, up from the prior estimate of $33 million to $35 million.
The lowered revenue guidance suggests a less steep increase in sales for the second half of the fiscal year 2024. Additionally, expectations for the fiscal year 2025 are being recalibrated, and the company's Long Range Plan (LRP) was not reaffirmed in the latest report.
The new CEO of Tactile Systems, who has been in the role for approximately one month, is anticipated to provide more insight into the company's LRP as the year progresses.
Despite the challenges, BTIG sees limited downside risk to the company's stock, which is trading at roughly 0.7 times the next twelve months' enterprise value to sales ratio.
The firm anticipates that upcoming product launches, improved sales representative productivity, and the company's ability to generate strong adjusted EBITDA, along with a solid balance sheet, could potentially mitigate some of the near-term pressures on the business.
InvestingPro Insights
With the recent adjustments in Tactile Systems Technology's (NASDAQ:TCMD) financial outlook, it's important for investors to consider the latest data and insights. According to InvestingPro, TCMD's market capitalization stands at $274.22 million, and it has a Price to Earnings (P/E) ratio of 9.57, which is relatively low compared to industry averages, potentially indicating an undervalued stock. Additionally, the company's revenue growth over the last twelve months was 7.38%, showing a steady increase despite the challenges faced.
InvestingPro Tips suggest that Tactile Systems Technology has a high shareholder yield and a valuation that implies a strong free cash flow yield, which could be appealing to value investors. Moreover, analysts have revised their earnings upwards for the upcoming period, signaling potential confidence in the company's financial future. For investors seeking a deeper analysis, there are several more InvestingPro Tips available, including insights on the company's debt levels and profitability forecasts, which can be found on the InvestingPro platform.
As the company navigates through Medicare documentation requirements and recalibrates its fiscal year 2025 expectations, these metrics and insights from InvestingPro could be instrumental in making informed investment decisions. The company's next earnings date is set for August 5, 2024, which will be a pivotal moment for investors to reassess the company's performance and outlook.
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