Piper Sandler launched coverage of Cutera (NASDAQ:CUTR) with an “overweight” rating and $18 price target. The stock closed at $11.36 on April 21.
Cutera is an aesthetics provider with technologies that will perform a wide array of treatments from tattoo removal to body contouring.
“The company is clearly impacted by the COVID-19 outbreak, but we believe treatments will snap back fairly quickly even through a prolonged recession,” writes analyst Matt O’Brien. In addition, “we believe the recent capital raise gives the company a solid financial footing to ramp operations as shelter-in-place orders are lifted.”
In a normalized environment, Mr. O’Brien said the company can take share in the large global aesthetics market, yield steady low double digit sales growth, and improve gross margins due to higher recurring revenue results, which carry improved margin.
The market for aesthetic procedures is estimated at nearly $14-billion and growing in the low double digits, so “we believe Cutera will benefit from this underlying strength once things normalize following the coronavirus pandemic,” he added.
Cutera also is developing new technologies, such as the treatment of acne, which could generate significant value in the future, Mr. O’Brien said.