Canaccord Genuity downgraded Acutus Medical (NASDAQ:AFIB) to “hold” from “buy” and slashed its price target to $3 from $10, citing a financing/dilution risk. The stock closed at $3.02 on Jan. 13.
Acutus is an arrhythmia management company focused on improving the way cardiac arrhythmias are diagnosed and treated, especially with an array of products and technologies targeting electrophysiology.
Analyst William Plovanic writes that over the past few days, Med-Tech executives have pointed to the challenging macro environment existing in the fourth quarter of 2021 and into 2022.
“For well capitalized companies, we believe most can weather the storm. However, we strongly believe Acutus will be challenged, given its sole focus and lack of strong commercial footing,” Mr. Plovanic said.
Further compounding the macro environment, he said, is the significant decline in price of Acutus shares during the past six months from about $16 to about $3, which puts “limitations on the company’s financing options and places it in a precarious position, given current cash positioning and burn rates.”
Mr. Plovanic suggests that at the current burn rate, the company will be net cash negative in the second half of 2022. “We believe that to fund operations at current levels, dilution to current shareholders could be significant.”
While Acutus has several unique assets including, mapping, access, and therapeutic technologies, Medtronic’s acquisition this week of Affera could result in one less natural acquirer of Acutus, he added.