CVRx Inc (CVRX) PT Lowered to $18 at Lake Street Capital Markets

Lake Street Capital Markets analyst Frank Takkinen lowered the price target on CVRx Inc (NASDAQ: CVRX) to $18.00 (from $35.00) while maintaining a Buy rating.

The analyst commented: "Q1 results were light of expectations on unexpected sales force turnover from 1) a too aggressive 2024 incentive structure negatively impacting sales force morale and 2) the departure of previous CEO Nadim Yared. While quantification of rep turnover was not provided, the Company reassured the
necessary incentive package changes have been made and personnel turnover has stabilized. Productivity improvements across territories were noted in March. Despite the short-term storm cloud, we do not think the thesis is broken. We think the opposite: CVRx has novel technology, is growing ~30%, has >80% GMs, adequate reimbursement, a new label, and limited competition. We think revenue growth can reaccelerate as new CEO Hykes and team stabilize the organization.
Perhaps misunderstood from the call, the changes Hykes is implementing are meant to build an infrastructure to establish Barostim as a standard of care over the long term, not radically change the outlook for 2024 with unnecessary expense. We think these are prudent investments and were reassured they do not negatively impact the expectation of CVRx to reach breakeven with existing liquidity. While the Company assumes a snapback to regular operations, we are unsure of how long headwinds will persist as the Company onboards new reps to reaccelerate growth. For this reason, we are reducing our PT, the function of a reduced multiple on a lower revenue estimate. However, we expect the move to be overdone given the blindside from a consistent outperformer. We think share weakness (down over 20% after hours) could offer an attractive buying opportunity. We maintain our Buy rating but lower PT to $18."

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