On Monday, Stifel analysts adjusted their expectations for RxSight Inc. (NASDAQ: RXST), reducing the price target to $35.00 from the previous $40.00. Despite this change, they decided to maintain a Hold rating on the company's stock.
According to InvestingPro data, analyst targets for RXST range from $35 to $70, suggesting potential upside despite recent market concerns. The adjustment follows the release of RxSight's preliminary results for the fourth quarter of 2024, which the analysts found somewhat disappointing.
RxSight reported total revenue of $40.2 million for the quarter, aligning with both Stifel's and consensus estimates. While quarterly growth appeared modest, InvestingPro data shows impressive revenue growth of 67.5% over the last twelve months, with a robust gross profit margin of 68.4%.
The company's Light Delivery Device (LDD) placements reached 83, meeting consensus expectations. However, the growth in placements, an increase of only 6 systems year-over-year, was the smallest since early 2021.
Additionally, the fourth quarter saw Light Adjustable Lens (LAL) units finish in line with expectations, leading to an estimated year-over-year utilization growth of just 9%. This represents a significant slowdown from the growth range of 17%-22% observed in the previous five quarters.
The company's initial revenue guidance for 2025 was set between $185 million and $197 million, with the midpoint of $191 million slightly exceeding the anticipated $188 million by Stifel and other analysts. However, Stifel's assessment of the situation is cautious. They interpret the soft fourth-quarter performance as an indicator of potentially limited upside for quarterly revenue in 2025.
Stifel's analysis is informed by their July survey checks, which suggested limited traction, reinforcing their previous downgrade thesis. They recommend staying on the sidelines for two key reasons: the expected increase in competition within the U.S. premium intraocular lens (IOL) market in 2025 and the commencement of efforts outside the United States (OUS) during the same year.
In other recent news, RxSight experienced a significant drop in shares due to a disappointing revenue forecast that fell short of average analyst predictions. The company's projected revenue for the fourth quarter was slightly below estimates and the forecast for the year 2024 also fell short. In contrast, Needham & Company maintained a positive stance on RxSight, reiterating a Buy rating. The company's revenue forecast for 2025 surpassed consensus estimates and projected growth in its Light Adjustable Lens systems.
However, RxSight's stock was downgraded by both Stifel and Wells Fargo (NYSE:WFC) due to slowing adoption projections and limited growth potential respectively. Despite this, UBS initiated coverage on RxSight with a Buy rating, highlighting the company's strong position in the U.S. cataract surgery market and projecting over 20% sales growth through 2028.
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