Lake Street Capital Markets senior research analyst, Ben Haynor, issued a research note today on Profound Medical (NASDAQ:PROF; TSX:PRN), reiterating his ‘buy’ rating and $17 target price on the company’s stock, highlighting it as one of his best investment ideas for 2025, and putting out a ‘call for help’ to investors to help solve what he describes as a valuation dilemma.
“Although 2024 was in some ways a transition year for Profound and the stock mostly treaded water despite some highly favorable news, we would be hard pressed to paint a better setup for the company in 2025,” writes Mr. Haynor.
“As of yesterday, superior CMS reimbursement kicked in, 25% above the standard of care for prostate cancer (PCa), robotic radical prostatectomy (rRP) performed with the Intuitive Surgical (ISRG – not rated) da Vinci robot and far higher against other PCa treatment options. In the first half of this year, we will begin to see results from Profound’s CAPTAIN trial, the first ever level 1 study comparing two prostate cancer treatment modalities (Profound’s TULSA vs. radical prostatectomy). We expect the CAPTAIN trial early read-outs on side effects (e.g. erectile dysfunction, incontinence, penile shortening) to be overwhelmingly positive for TULSA, and the side effects are critical to drive treatment choices for patients and their doctors in PCa. Around mid-year, Profound and Siemens will begin installing TULSA+ offerings, pairing the Siemens MAGNETOM Free.Max MRI with TULSA with a form factor and price point highly attractive to urology practices; we think TULSA is the “killer app” in this pairing,” he added.
In his note, Mr. Haynor also playfully put out a call to investors to help find any historical examples of medical technology firms which, like Profound, “that have achieved FDA regulatory clearance for a unique treatment modality, received multiple CPT1 codes on said modality with CMS reimbursement higher than the standard of care (and higher still versus other modalities), and have multi-year clinical data suggesting superior performance on the outcomes that matter most to patients and their doctors.”
“On merely those three criteria, we do not think there are many historical, and the count of those that remained with sub-$200M EVs may well be zero,” he said.
“In some sense, we think Profound’s TULSA profiles more similar to a newly approved class of drug where clinical data show it is a superior option for the vast majority of patients and attractive reimbursement is coming online,” he added.
