SI-BONE Poised For A Surge: Analyst Highlights Upside Potential With New Product Launches

Needham analyst David Saxon reiterated a Buy rating on SI-BONE, Inc SIBN, raising the price target to $32 from $27.

The analyst expects SIBN to beat and raise in 2Q and believes there is further upside to 2H23 estimates.

The analyst notes that sales force expansion, surgeon training, new product launches, and increased market penetration will drive quarterly revenue growth.

SIBN posted a 12% beat in 1Q23  with a record active surgeon count of 950. The analyst thinks the active surgeon count is expected to grow in 2Q23, given the company's broader portfolio, physician education, and strong market fundamentals. 

For 2Q, the analyst expects revenues to be $30.5 million, up 19%Y/Y. The company is expected to report an EPS loss of ($0.43) in 2Q, narrower than the EPS loss of ($0.54) in the year-ago period. Gross margins are expected to contract by 600 bps to 80.5%.

However, 2Q estimates imply a ~5% sequential decline, suggesting estimates are conservative, the analyst notes. 

SIBN is predicted to end 2Q with >$150 million in cash and equivalents, including proceeds from its equity financing in May.

Given the expected revenue upside with a continuation of other leverage drivers, Saxon forecasts an upside on the bottom line throughout 2023. 

Going ahead, the analyst expects a Granite line extension launch in 2024 ($700 million in TAM expansion) to result in a potential upside to outer year estimates.

Overall, the analyst expects building TORQ momentum and greater adoption of Granite, supported by a meaningful NTAP, to help drive upside.

Saxon believes SIBN could reach adjusted EBITDA quarterly sometime in 2024, potentially seeing it annually from 2025. 

Price Action: SIBN shares are trading higher by 2.01% to $26.91 on the last check Wednesday.