Lake Street Capital Markets Assumes Electromed (ELMD) at Buy

Lake Street Capital Markets analyst Benjamin Haynor assumes coverage on Electromed (NYSE: ELMD) with a Buy rating and a price target of $36.00.

The analyst comments "Electromed reported solid Q4 results, above both us and the Street, as the company continues to execute well in the bronchiectasis (BE) market, which features substantial undiagnosed and untreated populations. With only 148K of the 923K diagnosed BE patients in the U.S. presently on HFCWO therapy, a substantial opportunity remains within the diagnosed population, and, beyond this, ~4.0M people in the U.S. are estimated to have BE but are undiagnosed. The recent approval of Brinsupri (brensocatib) from Insmed (INSM – not rated), which treats the inflammation common in BE patients, should raise awareness of BE, but, of course, only addresses one leg of the three-legged BE stool, the other legs being airway clearance and infection treatment. Naturally, we believe greater baseline awareness of BE will lead to more diagnoses as well as a solid baseline market growth rate given the undiagnosed/untreated characteristics of the market. As such, we do not believe heroic efforts are required by Electromed to drive continued strong performance. The company can simply continue adding sales territories at a measured pace to capture a meaningful amount of market growth. With the leading HFCWO product responsible for ~0.1% of its parent company’s sales, we do not believe substantial resources will be dedicated to the product, allowing Electromed to take share. Tactile Medical (TCMD – not rated) is also gaining share from the market leader, but that company’s major focus remains lymphedema, and, thus, its HFCWO offering does not receive the same proportion of attention as it does at Electromed. Inogen (INGN – not rated) also has a BE offering (Simeox) with FDA clearance, but it has a different mechanism of action and has yet to secure reimbursement. As such, we expect Electromed to be able to post consistent double-digit revenue growth in the years to come and see operating leverage arising from the top line growth as the company has demonstrated in recent years. Finally, we think the sales force size and productivity guidance laid out by management are conservative as the company sees only a ~10% expansion in direct salesperson headcount over the course of this year, and the existing 55-person strong salesforce has already succeeded in reaching their $1.0M-$1.1M/year/rep productivity expectation for FY2026. Yet, a new CRM has been adopted as of last month, which should further boost productivity. We are assuming coverage with a Buy rating and $36 price target."

For an analyst ratings summary and ratings history on Electromed click here. For more ratings news on Electromed click here.

Shares of Electromed closed at $20.66 yesterday.

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