On Thursday, Needham, a well-known investment firm, adjusted its rating for Inari Medical Inc. (NASDAQ: NARI) stock, changing it from Buy to Hold. The decision comes as the firm anticipates heightened competition in the venous thrombectomy market, where Inari operates.
The Needham analyst cited concerns that Inari Medical is losing market share to its competitor, Penumbra (NYSE:PEN), which also holds a Hold rating. Additionally, the analyst predicts the market will become more crowded as new companies enter the space. While the analyst remains optimistic about Inari's Emerging Therapies, they express doubt that the stock will perform well if the venous thrombectomy market slows further.
Inari Medical's shares have recently rebounded to pre-investigation levels, following a period of scrutiny by the Department of Justice (DOJ). The analyst believes that the current share price no longer reflects the risks associated with the DOJ investigation, leading to the conclusion that the shares are now fairly valued.
The shift in valuation by Needham suggests a change in outlook for Inari Medical, as the market dynamics of its industry continue to evolve. The company's future performance in the stock market will likely be influenced by its ability to navigate the competitive landscape and capitalize on its Emerging Therapies.
In other recent news, Inari Medical has been the focus of multiple analyst reviews, following robust Q1 results. The company reported a 23% year-over-year increase in revenue, reaching $143.2 million.
This growth was primarily attributed to U.S. core venous thromboembolism (VTE) treatments, prompting the firm to raise its full-year revenue guidance to between $592.5 million and $602.5 million. Despite these positive figures, Inari Medical reported a GAAP operating loss of $17.2 million due to several deal-related expenses.
In response to these results, Truist Securities, Baird, Piper Sandler, Canaccord Genuity, and Needham have all adjusted their price targets for Inari Medical. Truist Securities raised its target to $60, maintaining a Hold rating, while Baird increased its target to $65, retaining an Outperform rating. Conversely, Piper Sandler, Canaccord Genuity, and Needham lowered their targets to $50, $55, and $57 respectively, but kept their neutral to positive stances.
Inari Medical also highlighted its three key growth drivers: VTE treatments, Emerging Therapies, and international expansion. The company plans to penetrate new markets such as China and Japan later this year. These recent developments reflect a mix of optimism and caution among analysts, as they weigh the company's strong performance against potential future challenges.
InvestingPro Insights
In light of Needham's recent rating adjustment for Inari Medical Inc. (NASDAQ: NARI), a closer look at the company's financial health through InvestingPro data reveals a complex picture. With a market capitalization of $3.41 billion, Inari Medical's financial metrics underscore the challenges highlighted by analysts. The company's trailing twelve-month P/E ratio stands at -363.79, reflecting its current lack of profitability. Additionally, the PEG ratio for the same period is -6.66, indicating potential overvaluation relative to earnings growth.
However, Inari Medical demonstrates robust revenue growth, with an increase of 26.1% over the last twelve months as of Q1 2024. This growth is consistent with the company's quarterly revenue growth of 23.27% in Q1 2024. The gross profit margin remains high at 87.67%, suggesting that the company maintains a strong ability to convert revenue into gross profit.
InvestingPro Tips suggest that while Inari's financial performance shows promise in certain areas, investors should be mindful of the company's negative operating income and EBITDA, which may impact long-term sustainability. Additionally, with 10 more InvestingPro Tips available, users can further explore Inari's financial landscape using the special offer code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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