BTIG analysts reiterated a Buy rating and $132.00 price target on iRhythm Technologies (IRTC).
The analysts comment "As iRhythm has begun hinting at its initial explorations of the sleep apnea diagnostics market, we want to understand the current diagnostic landscape today and where IRTC might eventually fit. To be clear, IRTC has just dipped a toe—no more yet—into this space and the exact direction of what comes next is not yet clear. IRTC is in the early stages of assessing the sleep apnea diagnostic process. Based on conversations with IRTC and in public calls, a pilot program is ongoing with 5-10 current IRTC customers (cardiologists and PCPs) to help IRTC learn if these doctors will prescribe an HST, which patients they may be prescribing an HST for, what prescribing behavior might be like, how the process of obstructive sleep apnea (OSA) diagnosis can be improved, and what happens after a patient is diagnosed, including who will manage that patient's sleep care? This pilot does not integrate any IRTC offerings and partners with a third-party independent diagnostic testing facility (IDTF). As detailed in the following pages, we see a fragmented home sleep testing market and opportunity for disruption. During the Q1 earnings call, IRTC highlighted their proven capabilities in arrhythmia detection and pointed to similarities with the home sleep testing market. There is also a large overlap between IRTC's existing patient population and people with OSA—the company has cited statistics that up to 80% of AF patients have OSA. For now, the pilot is the first step in evaluating where IRTC goes next. We see a wide range of possibilities that could be considered, including partnerships or a full-spectrum offering with an IRTC product and IDTF evaluation. Reimbursement, detailed on page 5, is another open question, as any test offering will need to meet certain requirements to qualify for coverage. We see the Sleep Diagnostic market as a potentially exciting adjacency but with this in the early stages of evaluation, do not expect meaningful revenue for at least a couple of years. Read on for more on the current sleep apnea detection landscape. We do not change our IRTC forecast. Reiterate Buy."