BTIG downgraded Tactile Systems Technology (NASDAQ:TCMD) to “neutral” from “buy,” saying the stock is up more than 100% year-to-date, exceeding its price target of $35. The stock closed at $36.79 on Sept. 15.
Tactile Medical is a leader in developing and marketing at-home therapy devices for the treatment of lymphedema and chronic venous insufficiency.
“Our thesis had been that shares would rally on multiple expansion and top-line growth,” writes analyst Dr. Sean Lavin, adding that this has occurred.
“When considering the positives of 20-plus% growth and profitability with the negatives of expiring IP and some reimbursement risk, we have felt Tactile should trade between four times and five times revenue,” Dr. Lavin said. “This landed our 12-month-out price target at $35 and would equate to a share price of $30 today.”
Dr. Lavin said he remains positive on the prospects of the underlying base business. “However, when considering the company’s current valuation … we feel there is a greater potential for the multiple to contract.”
