UPDATE: BTIG Downgrades Neuronetics (STIM) to Neutral on Q3 Revenue Shortfall
BTIG analyst Marie Thibault downgraded Neuronetics (NASDAQ: STIM) from Buy to Neutral after the company warned for Q3 revenue.
The analyst commented, "After market close on Tuesday, STIM announced preliminary Q3 revenue of ~$13.8M, well below guidance of $15M-$16M and our and consensus' $15.1M estimate. The company also meaningfully cut its full year revenue guide from $59M-$63M to $53.3M-$54.3M, a $5.5M cut at the midpoint on top of the Q3 miss, implying sequentially flat revenue for Q4. The prior full year guidance assumed any COVID resurgences would not impact its customers or patients. While we expected COVID dynamics duringQ3 would limit potential upside to numbers, we were surprised by the magnitude of the miss. The implied Q4 guide confuses us, as COVID hospitalizations have fallen rapidly over the past several weeks. We believe this guide accounts for continued hesitancy on purchasing expensive capital equipment among some individual psychiatrists, the possibility of fewer patients undergoing treatments during the winter holidays, and management not wanting to miss consensus yet again. While these are all near-term dynamics, we find it difficult at this time to find meaningful evidence that STIM will succeed with its current commercial strategy. We acknowledge that there are plenty of patients who are candidates for the therapy -- STIM notes a new program helped identify >500 patients within existing practices who are candidates -- but this has not yet turned into sales or procedure volume uplift. As of Tuesday's close, STIM'sstock price was 50% lowerthan pre-Q2 levels, making it clear investors were losing patience; shares will likely fall sharply on Wednesday. Until more concrete indicators of commercial traction materialize, we are pushed to the sidelines and downgrade to Neutral."
Shares of Neuronetics closed at $6.40 yesterday.
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