Titan Partners initiated coverage of Profound Medical (NASDAQ:PROF; TSX:PRN) with a “buy” rating and price target of $12.00. The stock closed at $5.96 on Sept 10.
Profound is a commercial-stage medical device company and an innovator in interventional MRI (iMRI) procedures. The company’s flagship platform, TULSA-PRO, enables MRI-guided, incision-free prostate ablation. Physicians use the TULSA Procedure to see, ablate, and confirm therapy in real time, supporting personalized treatment strategies across the continuum of prostate care—from whole-gland to subtotal, hemi, multifocal, and focal treatment. This approach enables individualized care using prostate tissue ablation, while minimizing the potential of the side effects that are typically associated with surgery or radiation, such as urinary incontinence and/or erectile dysfunction. Profound also commercializes Sonalleve, an MRI-guided therapy that provides a non-surgical treatment option for pain palliation of bone metastases, desmoid tumors, and osteoid osteoma, as well as for common gynecologic conditions including uterine fibroids and adenomyosis. Sonalleve delivers targeted therapy with no incisions, no blood loss during the procedure, no overnight hospital stay, and faster recovery — and, in gynecologic applications, enables uterine-sparing treatment that may help preserve fertility.
“We believe shares remain undervalued ahead of accelerated TULSA adoption given its 1) randomized clinical evidence supporting better functional outcomes vs. robotic radical prostatectomy (RP) & upcoming data readout, 2) strong reimbursement & hospital economics, 3) compelling sales pipeline, 4) large prostate cancer/BPH opportunity, 5) expected growth cycle within interventional MRIs, and 6) proximity to reaching critical mass,” writes analyst Kyle Bauser, PhD.
“TULSA provides an attractive economic proposition for hospitals relative to robotic prostatectomy. The Medicare national average payment is approximately $13,479 for TULSA versus $10,860 for robotic prostatectomy and the estimated costs of a robotic operating room are ~$3,000/hour compared with $300-800/hour for an MR suite.
“Importantly, reimbursement trends continue to provide a tailwind for TULSA adoption. CMS’s proposed 2027 hospital outpatient prospective payment system (OPPS) rule would increase TULSA reimbursement 14.9% to $15,494 per procedure, compared to $10,797 for HIFU/Aquablation (up 11.6% y/y), and $12,300 for robotic prostatectomy (up 13.2%), giving hospitals a proposed 44% reimbursement premium vs. HIFU/Aquablation and 26% vs. robotic RP,” he adds.
On valuation, Dr. Bauser writes, “Our $12 price target (101% upside to current levels) assumes a 9.6x EV/Sales multiple (peer group median) applied to our 2027 revenue estimate of $41.9M, $38.3M of cash, $4.5M of debt, and 37.8M diluted shares outstanding. We believe this multiple is justified, and could prove to be conservative, given PROF’s superior sales growth rate of 67% compared to the group average of 22% and upcoming CAPITAIN data readout that we expect to be favorable. We believe PROF could increasingly become an attractive acquisition target for a larger strategic that values TULSA’s trifecta technology. Profound’s current market capitalization of ~$250M presents a compelling entry point given the large addressable market and precedent transactions in this space (e.g., NeoTract and Laserscope both acquired for over $700M).”
