AGP ups Itamar Medical PT to $28 from $22.75

Itamar Medical

Alliance Global Partners raised its price target for Itamar Medical (NASDAQ:ITMR) to $28 from $22.75 after the company’s second quarter results beat expectations. However, the stock closed at $22.02, down $3.84, on Aug. 11.

Pointing to the stock’s 15% slide, analyst Ben Haynor writes that “we think this was largely driven due to the company not providing guidance despite a strong second quarter performance and the SoClean/Lunella and BioTelemetry agreements now expected to contribute little to 2020 results.”

Itamar is a leader in the sleep apnea market. Although the company did not offer formal guidance, management indicated that consensus 2020 estimates as reasonable, Mr. Haynor said. 

Prior to the COVID-19 pandemic, Itamar had de-emphasized its core sleep lab market efforts and looked to find additional channels for its products, leading to the SoClean and BioTelemetry agreements, targeting the direct-to-consumer and cardiology markets, respectively. 

Mr. Haynor said the SoClean agreement did not contribute any revenue during the second quarter and both companies are now in discussions on how to renegotiate the terms of the agreement, which originally had a $4.5-million minimum purchase commitment for 2020. “As an act of good faith, SoClean has waived the exclusivity provision of their agreement,” he added. 

He said the BioTelemetry partnership is now in a holding pattern, given Itamar’s need to focus on fulfilling demand in the core sleep market while BioTelemetry is focused on other priorities in its own business. “We do not think either development is surprising given the disruptions caused by the COVID-19 pandemic,” he added. 

“Although we recognize the aforementioned items and developments may have caused some disappointment, we came away from the report with a more favorable view of Itamar’s business,” Mr. Haynor said. 

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