BTIG ups Tactile Systems to buy with $62 PT

BTIG upgraded Tactile Systems Technology (NASDAQ:TCMD) to “buy” from “neutral” with a price target of $62. The stock closed at $49.30 on Aug. 6.

Tactile Medical is a leader in developing and marketing at-home therapy devices that treat lymphedema and chronic venous insufficiency.

“While we have no idea why the shares traded off about 10% [on Aug. 6] after a strong earnings report, now seems a good time [to upgrade],” writes analyst Dr. Sean Lavin.

His $62 price target is based on five times estimated revenue over the next 12-to-24 months, “though we note this stock has traded much higher than five times, so if earnings keep beating consensus and the qui tam gets cleaned up as we expect, an even higher share price could develop,” he added.

Dr. Lavin said the stock now trades two points below its comp group despite a stellar earnings track record and strong revenue growth.

The stock price has declined twice, he noted. “The first time we think was due to the qui tam lawsuit announced in late February and unsealed in March as well as the fact that pneumatic compression devices were included as approved topics on CMS’s Recovery Audit Program in early January,” he added.

“We admit that both risks – legal and reimbursement – are hard to handicap and cannot be disproved, but we do not believe these factors are likely to have a major impact on Tactile’s business going forward,” Dr. Lavin said.