ConforMIS has great potential. But is it a Buy now?

ConforMIS has great potential. But is it a Buy now?

ConforMIS is a medical stock. This company applies a new approach to orthopedics, combining advanced 3D imaging technology with the latest manufacturing capabilities and producing implants based on each patient’s unique size and shape. The coronavirus pandemic has taken a toll on the company, however. Despite that, several analysts think that now is the time to get its shares, as the stock is trading at $0.79 per share.

Kyle Rose, the Canaccord analyst, stated that even though elective procedure volumes will probably be significantly depressed through at least the second quarter, investors will see quarter-over-quarter improvements with gains dramatically increasing in the latter half of the year.

Furthermore, Analysts view the LT opportunity of custom orthopedic implants favorably, especially in a backdrop that includes growing expectations for the shift of procedures into the ASC/ outpatient setting. This sort of setting favors ConforMIS’s “implant-in-a-box” product offering.

Before the pandemic, the company’s underlying execution was trending positively. Initially, analysts expected its first-quarter revenue to reflect a 3% year-over-year decline. That would be significantly better than the actual 20.2% drop. But the slowdown due to the pandemic persisted throughout April.

Meanwhile, ConforMIS’s peers outperformed the company because this stock derives more of its revenue from primary elective procedures. Despite that, management still saw an uptick in order volumes during the last week of April and the first week of May.

How does the stock fare now?

According to Rose, the company expects procedures to continue trending higher in the latter half of the year. Furthermore, management thinks that the shift of orthopedic surgery toward the outpatient/ASC setting is accelerating.

ConforMIS’s development agreement with SYK’s Triathlon system may be commercially available by mid-2021. This would bring the company more profit. Considering all that, the analyst gave the stock a Buy rating and set a $2 price target. In the case of success, shareholders could gain 152% over the next twelve months.

Other analysts agree with Rose as well, giving ConforMIS a Strong Buy rating. The average price target indicates a 194% upside potential at $2.33.