William Blair's Got Nerve: Initiates AxoGen Coverage With Outperform

AxoGen, Inc. AXGN has no doubters.

The 13-year-old nerve-repair company has wooed analysts of late and secured a new vote of confidence Monday with a sixth Buy rating.

The Rating

William Blair analysts Kaila Krum and Anna Nussbaum initiated coverage with an Outperform rating.

The Thesis

AxoGen’s portfolio of nerve regeneration and repair treatments is seen to serve a $2.2 billion market in the U.S., where its penetration remains in the low-single-digits, and it recently expanded from extremity trauma indications to post-mastectomy breast neurotizations.

William Blair expects the company to become profitable at some point in 2019, particularly considering its 85-percent gross margins far outpace those of medical technology peers.

After doubling its direct presence in hospitals over the last few years, the firm registers growth nearly twice that of rivals, and William Blair expects no slowdown.

“Given the substantial opportunity today, the ability to grow in both new and existing accounts, and potential to eventually expand into incremental pipeline opportunities, we believe the company should be able to grow 40 percent-plus in 2018 and durably in the mid-30 percent range over the next three to five years,” Krum and Nussbaum wrote in a note.

Price Action

Shares closed down 4.8 percent at $25.35.

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