BTIG upgraded ConforMIS (NASDAQ:CFMS) to “buy” from “neutral” with a price target of $4. The stock was quoted at $2.58, up 30 cents, in afternoon trading on Dec. 20.
ConforMIS designs and manufactures customized knee implants, both the femur and tibia, for each patient.
Analyst Ryan Zimmerman writes that when he initiated coverage on ConforMIS, “we felt that the company had a superior technology but growth would remain challenged until surgeons saw value from the products. ConforMIS still needs to improve production times, increase margins, and grow faster but at this valuation the risk/reward is favorable, in our view.”
He said that while the company still faces challenges, “we believe the strategies management has undertaken over the previous year could begin to bear fruit in 2018 and any return to growth will begin to lift shares with expectations as low as they are.”
Shares of ConforMIS are down some 70% in 2017 and Mr. Zimmerman points out that many investors will be selling the stock for tax-loss purposes, offsetting gains in other areas of MedTech. “To that point, the selling offers an opportunity to pick up shares at discounted value,” he added.
While he doesn’t expect ConforMIS to immediately take the knee market by storm, “management’s efforts to improve the sales infrastructure, add distribution in geographic gaps, and go for targeted accounts could result in growth in 2018, especially on reasonable comparatives from 2017.”
