Monday’s analyst upgrades and downgrades Desjardins Securities analyst Frederic Tremblay raised his target price for shares of TSO3 Inc. (TOS-T) based on opportunities in the gastrointestinal market.
“With the first and only system cleared by the FDA for the terminal sterilization of duodenosocopes (approval of the claim was obtained earlier this month), TSO3’s STERIZONE VP4 sterilizer has a window of opportunity to penetrate the untapped U.S. GI market where high-level disinfection is the current standard of care,” he said. “We view this first-mover advantage in GI as refreshing for TSO3 vs the competition from larger, well-entrenched players in central sterile supply departments (CSSD). Another point of differentiation is that the sales efforts in GI are expected to be mainly the responsibility of TSO3, with Getinge playing a smaller role than in CSSD. ”
After recent meetings with the management of the Quebec-based company, Mr. Tremblay increased his 2019 revenue estimate to $26.6-million from $20.9-million. His earnings per share projection moved to a 5-cent loss from a 6-cent loss.
“Following our discussion with management, our previous approach of not including sales to the GI market into our forecasts appears overly conservative,” he said. “We updated our model to reflect our view that the STERIZONE VP4 sterilizer should appeal to early adopters in GI in the near term, followed by other hospitals looking for a solution that can enhance patient safety and help manage risk in the context of past superbug outbreaks associated with the use of flexible endoscopes.”
“Looking forward to more frequent updates on the progress of this show-me story. TOS can now provide more information to the market given its recently assembled direct sales platform. We believe announcements of purchase orders from GI or CSSD customers would be received positively by the investment community as TOS is currently considered to be a ‘show-me story.’”
With a “hold” rating, his target rose to $1.25 from 90 cents. The average is $1.63.