Cardiovascular device company Shockwave Medical presents a solid growth story over the next few years, according to Deutsche Bank. Analyst Imron Zafar initiated coverage of the medical tech company with a buy rating and a $285 price target. That implies that shares could surge nearly 40% in the coming year. So far this year, the stock has gained more than 15%. “We regard Shockwave Medical as among the most compelling growth stories across medtech over the next few years,” Zafar wrote in a Dec. 16 note. Growth opportunities The firm sees Shockwave growing at a compound annual growth rate of more than 24% through the end of 2026, fueled by its intravascular lithotripsy technology adoption in the U.S. coupled with expansion into “the massive and still untapped China and Japan markets.” That will yield a sustainable, mid-80s growth margin and earnings before interest and taxes margin of more than 30% by the end of 2025, according to Deutsche’s estimates. The U.S. total market for the company’s technology is roughly 25% penetrated, leaving lots of room to grow. And, further innovation and new product launches should help fuel higher technology adoption, according to the note. This all adds up to significant revenue growth. Deutsche forecasts that Shockwave can reach more than $1 billion in sales by 2026, with its revenues doubling over the next three to four years. Recession proof Deutsche also sees Shockwave as well-positioned to weather any tough macroeconomic backdrop that may arise in the U.S. in 2023. “Medtech broadly continues to be pressured by the multitude of unprecedented macro headwinds — hospital staffing, supply chain disruptions, inflationary (gross margin) pressures, hospital capex cuts among others – that promise to persist for some time,” wrote Zafar. “Continued weakness in interventional procedure volumes has dampened sentiment around the stock in terms of concerns around SWAV’s growth momentum potentially slowing as a result.” Deutsche sees these concerns as largely misplaced and forecasts strong top-line momentum for Shockwave even amid prevailing macro headwinds. Some of this insight is from Deutsche Bank’s proprietary U.S. sales database for medtech, which signals strength for Shockwave.
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