Despite FDA Approval, Expectations Are Too High, Says Raymond James

At long last, following a year of Covid delays, Sensonics (SENS) received the FDA’s nod of approval for its long-lasting continuous glucose monitoring system (CGM).

The Diabetes device maker’s Eversense E3 (180-Day sensor) has now been given the go ahead and should be available to patients in the U.S. via Ascensia Diabetes Care, the company’s worldwide commercial partner, starting in 2Q22.

Despite the approval’s delay – mainly on account of backlogs at the FDA and in-line 2021 results – the lone catalyst single-handedly pushed the shares up by 218% in 2021.

While Raymond James’ Jayson Bedford calls the approval an “important milestone” for the company, he also believes it was “well anticipated.” In fact, the analyst thinks the shares’ valuation is out of whack, even following the ‘sell the news’ selloff (down by 42% in the subsequent sessions).

“We still view SENS as one of the most dislocated stocks in our universe, as estimates are trending lower, and the valuation, in our view, is unsustainable,” the 5-star analyst said. “We respect management, and acknowledge that the Eversense technology is differentiated, but expectations, in our view, are too high.”

The analyst also thinks the company’s 2022 revenue guidance of $14-18 million – the Street had expected $31 million – seems “somewhat meager given the anticipated marketing push from Ascensia.”

With the big catalyst having played out, there are only “smaller catalysts” to look forward to in 1H22 and the stock’s success hinges on executing on the commercial front. While 2Q should also see E3’s European approval, the company’s gen-1 180-sensor has already been on the market in the region for the past four years.

As such, Bedford gives Sensonics shares an Underperform (i.e. Sell) rating. (To watch Bedford’s track record, click here)

Looking at the reviews breakdown, there is little consent here amongst the analysts. The stock’s Hold consensus rating is based on 1 Buy, Hold and Sell, each. At $1.90, the average price target implies ~10% downside from the current share price of $2.11. (See SENS stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.