Outset Medical extends gains as RBC Capital Markets initiates at Outperform

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• MedTech company Outset Medical (NASDAQ:OM) stretched the post-earnings rally to the third straight session on Friday after RBC Capital Markets launched its coverage with an Outperform recommendation pointing to its undervaluation.
• Outset Medical (OM), which develops a hemodialysis system, has lost ~64% over the past 12 months, underperforming its peers in the dialysis market, such as DaVita (DVA), Fresenius Medical Care (FMS) as indicated in this graph.
• RBC analysts led by Shagun Singh think that Outset Medical (OM), which offers technology to lower the cost and complexity of dialysis, has the potential to cater to an $11B total addressable market for kidney failure in the U.S.
• “In our view, OM is significantly undervalued given the opportunities ahead,” the team wrote, issuing a $23 per share target on the stock.
• Thanks to industry tailwinds such as the shift to home care aided by reimbursements, Outset Medical (OM) is positioned to generate 46% and 39% CAGR for 3-year and 5-year periods, the best in MedTech, the analysts added.
• With its Q3 2022 financials on Tuesday, Outset Medical (OM) topped Street estimates and raised its full-year outlook.