Canaccord Genuity Believes IRTC Won’t Stop Here

Canaccord Genuity analyst Jason Mills reiterated a Buy rating on Irhythm Technologies (NASDAQ: IRTC) today and set a price target of $40. The company’s shares closed yesterday at $35.99, close to its 52-week high of $37.06.

Mills observed:

“We reiterate our BUY rating on IRTC following another stellar quarter. The firm once again delivered upside to top-line and gross margin expectations, while its initial 2017 guidance exceeded our/consensus expectations, implying the firm is well positioned to continue robust revenue growth (+37% Y/Y) and gross margin (+260bps) trends. All key growth indicators trended up in Q4 – ongoing success on the coverage/contracting front, increasing sales rep productivity (notably, our proprietary rep productivity model, attached herein, suggests upside to our upwardly-revised numbers), strong growth in both same and new store sales, and continued blended ASP inflation. We have confidence IRTC can meet or exceed our new P&L targets through 2020, namely: 1) 30% forward 4-year revenue CAGR; 2) ~ 1,000 basis points of gross margin expansion (67% in 2016 to 77%+ in 2020E); and 3) positive cash flow by 2019 without the need for new capital. With respect to its TAM opportunities, we think IRTC is entering the bottom of the first inning within the existing ~4.7B US AECG procedure market (we currently model IRTC share of 5% exiting 2016), while potential future expansion into new target markets (silent AF, post-AF ablation, post-cardiac surgery and post- ischemic stroke) represent a whole new ballgame.”

According to TipRanks.com, Mills is a 5-star analyst with an average return of 7.8% and a 63.8% success rate. Mills covers the Healthcare sector, focusing on stocks such as Integer Holdings Corporation, Tactile Systems Technology, and Trivascular Technologies.

Irhythm Technologies has an analyst consensus of Moderate Buy, with a price target consensus of $40.

The company has a one year high of $37.06 and a one year low of $22.16. Currently, Irhythm Technologies has an average volume of 144.7K.

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iRhythm Technologies, Inc. is a commercial-stage digital healthcare company engages in the development of monitoring and diagnostic solutions for detection of cardiac arrhythmias. It provides ambulatory electrocardiogram, or ECG, monitoring for patients at risk for arrhythmias. It also offers ZIO Service improves physician management and diagnosis of arrhythmias by providing a wearable biosensor, curating, and analyzing voluminous ECG data. The company was founded by Uday N. Kumar in September 2006 and is headquartered in San Francisco, CA.