On Friday, Wells Fargo announced a downgrade for Pulmonx Corp. (NASDAQ:LUNG) from Overweight to Equal Weight and reduced its price target to $14 from $16. The adjustment comes after a period of positive performance following the company's recovery from the COVID-19 pandemic impacts.
The firm had previously upgraded Pulmonx's stock in February 2023, citing a significant turnaround in the company's performance in the fourth quarter of 2022. During that quarter, Pulmonx reported an 18.4% revenue growth excluding foreign exchange impacts, with a notable 30% year-over-year increase in the U.S. market, reaching $9.5 million in sales.
The recent downgrade reflects a reassessment despite Pulmonx's strong growth throughout 2023, where the company experienced a 28% increase in sales compared to the previous year. The analyst from Wells Fargo acknowledged the traction gained by the company's core endobronchial valve (EBV) business post-COVID.
Pulmonx's performance post-pandemic had been a key factor in the previous upgrade, with the company's Q4 2022 results marking a pivotal moment in its recovery trajectory. The strong sales growth in 2023 further demonstrated the company's progress and the increasing demand for its products.
The new price target of $14 set by Wells Fargo indicates a more conservative outlook on Pulmonx's stock value, despite the company's recent growth. The Equal Weight rating suggests that the analyst views the company's stock as adequately valued at the current price level.
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