Analysts start Sonendo at buy, OW

Analyst for Stifel and Piper Sandler initiated coverage of Sonendo (NYSE:SONX) with “buy” and “overweight” ratings and prices targets of $16 and $17, respectively. The stock closed at $10.55 on Nov. 22.

Sonendo is a commercial-stage medical technology company focused on saving teeth from tooth decay, the most prevalent chronic disease globally. 

“The company’s GentleWave System is significantly differentiated in the dental industry, with the potential to disrupt the overall root canal market,” writes Stifel analyst Jonathan Block.

“While a good amount of work lies ahead (roll out of the next-generation procedure instrument, gross margin expansion, bifurcated sales force driving system adoption and procedure utilization), our proprietary diligence suggests that GentleWave possesses many of the same characteristics that have allowed a select number of dental technologies to successfully shake up their respective part of the dental industry,” he added. 

Piper Sandler analyst Jason Bednar writes that with an initial focus on a $1.9-billion total addressable market for root canal treatments and direct competition in this field limited to a file-based approach commonly associated with significant post-op pain and a high re-visit rate, “we believe it’s only a matter of time before a majority of root canal treatments are completed using GentleWave.” 

Mr. Bednar said he sees this standard of care conversion supporting rapid growth for Sonendo of approximately 35% to 40% CAGR in revenue, and “we believe investors taking advantage of shares at current discounted levels will be well-rewarded.”