BTIG cuts Neuronetics to neutral

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BTIG downgraded Neuronetics (NASDAQ:STIM) to “neutral” and removed its price target, citing disappointing third quarter preliminary revenue and “perplexing fourth quarter guidance.” The stock closed at $6.40 on Oct. 12.

Neuronetics markets the NeuroStar system, which was approved in the U.S. in 2008 for the treatment of adult patients with major depressive disorder that have failed to achieve satisfactory improvement from prior antidepressant medications in the current episode. 

Analyst Marie Thibault writes that preliminary third quarter revenue missed consensus and the company cut full year revenue guidance, implying sequentially flat revenue for the fourth quarter.

“While we expected COVID dynamics during the third quarter would limit potential upside to numbers, we were surprised by the magnitude of the miss,” she said, adding that “the implied fourth quarter guide confuses us,” as COVID hospitalizations have fallen rapidly over the past several weeks. 

“We believe this guide accounts for continued hesitancy on purchasing expensive capital equipment among some individual psychiatrists, the possibility of fewer patients undergoing treatments during the winter holidays and management not wanting to miss consensus yet again,” Ms. Thibault said.

“While these are all near-term dynamics, we find it difficult at this time to find meaningful evidence that Neuronetics will succeed with its current commercial strategy,” she added. “Until more concrete indicators of commercial traction materialize, we are pushed to the sidelines.”