On Thursday, Silk Road Medical Inc . (NASDAQ:SILK) received an upgrade from a Hold to a Buy rating for its stock by Argus, with a new price target set at $24. The revised outlook is based on the company's strategic focus on profitable growth throughout 2024, with expectations of 10%-12% revenue growth for the year. Management at Silk Road Medical is working towards moderate gains in gross margin and growth in adjusted EBITDA.
The company is aiming to enhance the utilization of its TransCarotid Artery Revascularization (TCAR) procedure among its current base of 2,800 trained physicians. In the United States, Silk Road Medical has expanded its active sales territories to 85. Internationally, the company has secured a new distribution agreement in Japan and has received regulatory approval for its ENROUTE Neuroprotection System (NPS) in China.
The potential market for TCAR is significant, with an estimated 4.4 million Americans suffering from carotid artery disease (CAD) and about 440,000 new diagnoses each year. Despite the large number of affected individuals, the market remains underpenetrated. In 2023, approximately 25,200 TCAR procedures were performed in the U.S. using Silk Road Medical's devices. The opportunity to convert existing procedures that use older technologies to TCAR represents a $1.2 billion potential in the U.S. market. Additionally, addressing the undiagnosed and untreated population could lead to a further $1.9 billion opportunity. Beyond the U.S., there is an estimated $2.3 billion opportunity internationally for treating carotid artery disease.
TCAR is a procedure that involves expanding the narrowed carotid artery by inserting a balloon catheter through an incision near the groin. Alongside this, the ENROUTE NPS is used to temporarily reverse blood flow to the brain, preventing potential stroke-causing clots from reaching the brain. TCAR offers clinical advantages over competing procedures, such as carotid endarterectomy (CEA). It is less invasive, requires shorter operating room time, carries a lower risk of nerve damage, and has shown a lower risk of post-procedure stroke and death compared to Transfemoral Carotid Stenting.
Despite the optimistic outlook, Argus cautions that Silk Road Medical is a small-cap stock and, as such, comes with the inherent trading volatility and risks typical of stocks in this category. The stock had suffered a significant drop of 88% from the beginning of 2023 to a yearly low in October, but it has since rebounded, marking a 182% increase through March 4.
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