Piper Jaffray starts TELA Bio at OW; PT $17

Piper Jaffray initiated coverage of TELA Bio (NASDAQ:TELA) with an “overweight” rating and $17 price target. The stock closed at $12.31 on Dec. 2.

TELA is a regenerative medicine company, with products used in hernia repair and plastic and reconstructive surgery. Its technology is a biologic, with the strength of synthetic product, which are highly desirable characteristics for clinicians.

“Having covered the mesh market for approximately a decade at this point, we know that clinicians have always called for a good biologic product that remodels quickly back into the body, without resulting in infections, with the strength of a synthetic to minimize the risk of recurrence,” writes analyst Matt O’Brien. “We believe TELA has this product, which comes at a lower price.”

Taken together, he said the company is primed to disrupt the approximate $2-billion domestic market for mesh products. “We model modest overall share taking in this market in the coming years, which appears achievable, and if the company delivers on these estimates, revenue growth would be among the best in all of med tech,” Mr. O’Brien added.