On Thursday, H.C. Wainwright adjusted its perspective on Zynex Inc. (NASDAQ:ZYXI), a medical technology company specializing in pain management products. The firm's analyst revised the 12-month price target downward to $16.00 from the previous $21.00 while still maintaining a Buy rating on the stock. This decision follows Zynex's announcement of its second quarter financial results for 2024.
The company reported a total revenue of $49.9 million, which, despite showing an 11% year-over-year growth, fell short of the analyst's expectations of $51.8 million. Net income also came in lower than anticipated at $1.2 million, or $0.04 per share, compared to the estimated $2.5 million.
Zynex's management highlighted a 20% year-over-year increase in orders during the second quarter. However, the revenue growth did not meet expectations, attributed to a strategic reduction in the number of sales representatives aimed at enhancing profitability and productivity, as well as a shift in the product mix.
The company's workforce currently includes fewer than 400 sales representatives, and this number is expected to remain relatively stable for the rest of 2024. Plans to possibly increase the sales force are being considered for 2025. Pain management products are projected to remain the primary growth driver for the company in both 2024 and 2025.
Looking ahead, Zynex's management has set a minimum revenue target of $50.0 million for the third quarter of 2024 and anticipates diluted earnings per share (EPS) to be at least $0.05. Furthermore, the full-year revenue guidance for 2024 has been revised, now aiming for a minimum of $200 million, down from the previous forecast of $227 million, with diluted EPS expected to be at least $0.20 per share.
In light of these updates, H.C. Wainwright has aligned its projections, estimating a 20% top-line growth for 2025. The firm's current valuation of Zynex stands at approximately $512 million, equating to the updated price target of $16 per share.
InvestingPro Insights
As Zynex Inc. (NASDAQ:ZYXI) adapts its strategies and targets amidst evolving market conditions, real-time data from InvestingPro provides a comprehensive picture of the company's financial health and market performance. With a market capitalization of $323.79 million and a robust gross profit margin of 79.83% in the last twelve months as of Q1 2024, Zynex demonstrates significant efficiency in its operations. Despite trading at a high earnings multiple with a P/E ratio of 43.08, the company's liquid assets surpass its short-term obligations, indicating a strong liquidity position.
An InvestingPro Tip highlights that Zynex's management has been aggressively buying back shares, which could signal confidence in the company's future prospects and potentially enhance shareholder value. Additionally, Zynex has been profitable over the last twelve months, and analysts predict the company will maintain profitability this year. These factors may offer investors reassurance about the company's capacity to navigate its current challenges.
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