On Friday, Lake Street Capital Markets initiated coverage of Sensus Healthcare (NASDAQ:SRTS), a medical device company specializing in non-invasive treatments for non-melanoma skin cancer (NMSC) and other skin conditions. The analysts gave Sensus Healthcare shares a "buy" rating with a price target of USD 18.00. With a market capitalization of $126 million and an impressive gross margin of 61%, Sensus has demonstrated a robust financial performance and delivered a remarkable 111% return on investment last year.
The Lake Street analyst emphasized the renaissance of superficial radiation therapy (SRT), pointing to its widespread use in dermatology practices in the 1970s. Despite the proven safety and efficacy of SRT, regulatory changes and shifts in reimbursement policies led to a decline in its use until Sensus introduced a modern SRT solution in 2010. Since then, Sensus has successfully installed over 750 units of their SRT-100 product line. The InvestingPro analysis shows that the company holds more cash than debt and has strong liquidity, with current assets significantly exceeding current liabilities.
The Centers for Medicare & Medicaid Services (CMS) increased reimbursement for SRT by 66% in 2021, which contrasts with the continued reduction in reimbursement for microscopic Mohs surgery (MMS), which is considered the "gold standard" for surgical treatment of NMSC. The analyst highlighted the benefits of SRT, including its non-invasive nature, the absence of surgical scars and the ability for patients to continue their daily lives during treatment. These advantages are not offered by MMS and other surgical options that currently dominate the market.
Sensus Healthcare currently operates without direct competition in the SRT market, and the analyst indicated that no competitors are likely to emerge in the near future. The firm's positive view on Sensus Healthcare reflects its belief in the company's growth potential and market dominance due to its unique product offering and favorable changes in the reimbursement landscape.
In other recent news, Sensus Healthcare recorded a notable increase in its financial performance. In the third quarter of 2024, the company generated revenues of USD 8.8 million, an increase of 127% year-on-year. This increase is largely due to the successful delivery of 27 SRT systems, including one system to an international customer. The company also reported a net profit of $1.2 million, a significant improvement on the forecast loss.
H.C. Wainwright responded to these developments by raising its price target on Sensus Healthcare to $11.00 and maintaining its "Buy" rating on the stock. In addition, Sensus Healthcare has expanded its fair deal agreements, most notably by entering into a significant agreement with a large network of dermatology clinics in the United States.
The company's CEO, Joseph Sardano, expressed optimism about the company's development, citing the strength of its technology and software. Sensus Healthcare is also focused on expanding its market reach, particularly in the treatment of non-melanoma skin cancer and in international markets. These are some of the recent developments for the company, which maintains a healthy cash position with $22.6 million in reserves and no debt.
