TransMedics' Technology Poised To Transform Underpenetrated $8B Organ Transplant Market, Analyst Expects 22% Upside

Needham analyst initiated coverage on TransMedics Group Inc TMDX, a commercial-stage medical technology company focused on organ transplant therapy for end-stage organ failure patients across multiple disease states.

The company has developed the Organ Care System (OCS), which is designed to better preserve, assess, and maintain donor organs.

Needham notes that TransMedics’ OCS technology, backed by extensive clinical data and multiple FDA approvals, is transforming the underpenetrated organ transplant market, which is over $8 billion and has less than 6% penetration.

Also Read: This MedTech Company Has Market Expansion Opportunity, Says Bullish Analyst.

The company’s National OCS Program (NOP), a turnkey organ procurement service, has been a significant growth driver.

TransMedics has its planes, a staff of surgeons and clinical specialists, and a logistics team that enables transplant centers to procure and transplant more organs.

Needham notes that NOP is driving the increasing use of OCS, and TransMedics’ revenue growth accelerated from 18% in 2021 before NOP to 209% in 2022 after NOP.

TransMedics is projected to become profitable in 2024, and operating margin, EPS, and cash flow are expected to improve rapidly in 2025-2026.

The analyst initiated with a Buy rating and a price target of $208, representing an upside of almost 22%, citing that the company is ‘bending the organ transplant curve.’

Needham writes, “We believe that TransMedics’ valuation is reasonable considering its growth rate and potential for upside to consensus.”

In the second quarter of 2024, revenue reached $114.3 million, a 118% year-over-year increase driven primarily by the increase in utilization of the Organ Care System across all three organs through the National OCS Program and additional revenue generated by the launch of TransMedics logistics services.

Price Action: TMDX stock is up 2.58% at $170.47 at the last check on Wednesday.

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