Penumbra Has Challenged The 'Paradigm' Of Stroke Treatment; William Blair Initiates At Outperform

Penumbra Inc PEN shares trended higher Wednesday on the confidence of one new analyst.

The Rating

William Blair analyst Kaila Krum initiated coverage with an Outperform rating.

The Thesis

Penumbra boasts stable footing in the stroke market, having “challenged the paradigm of treatment,” according to Krum.

Its neurovascular aspiration system for ischemic strokes can tap into a $1.5 billion domestic opportunity only 15-percent penetrated by mechanical thrombectomies, and this particular market may be striking an inflection point, with competition offset by market growth.

“We believe the mechanical thrombectomy market can grow 20 percent-plus for the next two to three years, with Penumbra’s aspiration technology outpacing that growth,” Krum wrote in a Wednesday note.

At the same time, Penumbra’s portfolio for venous and arterial clots brings a $480 million opportunity expected to expand to $520 million by the end of 2019. Additional innovations could broaden its reach to intracerebral hemorrhage and coronary thrombosis indications.

“Shares of Penumbra trade at a premium to the rest of its med tech peers on a revenue basis (8.0 times our 2018 estimate and 6.8 times our 2019 estimate), although we believe that the premium is warranted given its superior growth profile; vast, underpenetrated market opportunity; and differentiated aspiration technology,” Krum wrote.

Price Action

At time of publication, shares were trading up 1.7 percent at $101.05.

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