Neuronetics Wins A Sell-Side Bull With Pill-Free Depression Treatment

Neuronetics Inc STIM boasts a therapy that addresses a pressing medical need, according to JMP Securities. 

The Analyst

Analyst David Turkaly initiated coverage of Neuronetics with an Outperform rating and $36 price target.

The Thesis

For patients who have failed one of more types of antidepressant medication, Neuronetics' NeuroStar TMS therapy stimulates an exact location on the central or peripheral nervous system with electrical or magnetic energy, Turkaly said in the initiation note. (See the analyst's track record here.) 

The end result is a similar therapeutic impact than what is achieved with pills, but safer, the analyst said. 

Neuronetics' focus on major depressive disorder represents a $10-billion domestic market, according to JMP. 

The market for antidepressant drugs, coupled with the company's differentiated treatment option, should result in a solid growth rate of 20 percent and lift the stock's valuation to a level in-line with the high-growth medical technology sector, the analyst said.

JMP's $36 price target is based on an approximate 7-8 multiple on EV/revenue on expected 2020 sales of $75 million. 

Price Action

Neuronetics shares were down 0.88 percent at $26.02 at the close Monday. 

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