Focus On Digital Solution Could Be A Turnaround For Surgalign, Says Analyst

HC Wainwright has initiated coverage on Surgalign Holdings Inc SRGA with a Buy rating and a price target of $3.50.
Surgalign is a pure-play global spine company focused on developing digital health solutions for spine surgery and commercializing spinal implants and orthobiologics.
Since 2018, Surgalign has suffered from lower-than-expected sales, increased competition, decreased reimbursement, and a significant hit from the pandemic.
Related: Surgalign Scores FDA Approval For New Flagship Posterior Fixation Platform.
In November, the company announced a corporate restructuring plan without disclosing the details of the strategy. SRGA expects an estimated cash savings of approximately $30-$35.0 million.
The analyst writes that SRGA will discontinue unprofitable and lower-margin spine implant products and focus on recently launched products and digital solutions.
Due to the discontinuations, Surgalign is expected to generate approximately $79 million in 2023. As digital products gain adoption, sales are expected to reach $218 million in 2031.
The analyst sees SRGA's current market capitalization of $10 million as significantly undervalued and provides an attractive entry point for long-term investors.
Price Action: SRGA shares are up 8.33% at $1.47 on the last check Wednesday.