ConforMIS Inc (NASDAQ: CFMS) is headed up in the market this morning after announcing that it has received Australian regulatory approval for a medical device. Here’s what’s going on:
Skip to What You Want to Read
- ConforMIS Announces Regulatory Approval
- Management Commentary
- What Analysts Think About CFMS Stock
- Risks to Consider Before Buying CFMS Stock
- Final Thoughts
ConforMIS Announces Regulatory Approval
As mentioned above, ConforMIS is having a strong start to the trading session this morning after announcing Australian regulatory approval. In the press release, the company said that it has received marketing clearance for its patient-specific iTotal PS total knee replacement system by the Therapeutic Goods Administration in Australia.
The Therapeutic Goods Administration is part of the Australian Department of Health and authorizes the marketing of medical devices and other healthcare products in Australia.
CFMS went on to explain that the iTotal PS system was launched in the United States in 2016 and is designed to address the shortcomings of traditional, off-the-shelf knee replacements that are manufactured in limited sizes and shapes.
The iTotal PS system is specifically designed to restore the natural shape of each patient’s knee, avoiding overhang, rotation, and size compromises that are often associated with pain after surgery.
Moreover, CFMS said that its iTotal PS implants use a customized cam and spine feature to serve the function of posterior cruciate ligament and to provide optimal stability throughout the full range of motion.
This is a huge opportunity as the global knee joint reconstruction market is valued at more than $9 billion as of 2019.
In a statement, Mark Augusti, President and CEO at CFMS, had the following to offer:
Receiving clearance for our iTotal® PS product in Australia will allow us to offer a best-in-class, patient-specific solution to relieve patients’ chronic knee joint pain. With this clearance, we have greatly expanded the number of potential patients who will be candidates for our personalized knee replacement implants, and we are thrilled to offer the benefits of our unique technology to surgeons in Australia who prefer a posterior-stabilized design to a cruciate-retaining one.
What Analysts Think About CFMS Stock
At the moment, there aren’t many analysts covering ConforMIS. In fact, there’s only one offering coverage on the stock. However, that analyst has an overwhelmingly positive opinion.
The one analyst covering CFMS stock rates it a Buy with a price target of $3 per share, representing the potential for more than 180% gains when compared to yesterday’s closing price.
Risks to Consider Before Buying CFMS Stock
If you’re thinking about diving into CFMS stock, it’s important to consider the risks. Afterall, there’s no such thing as an investment that comes without risks. When it comes to ConforMIS, the most significant risks to consider include:
- Pennies. ConforMIS stock is a penny stock. As a result, the stock is known to experience extreme levels of volatility, which can make entrance and exit decisions difficult.
- Sales. CFMS isn’t a profitable company, which does raise some concerns. While the global knee replacement market is valued at $9 billion, the company has had its knee replacement product approved in the United States for nearly five years and has yet to reach profitability. That raises questions about the feasibility of the product on the market.
- Dilution. As a company that’s not yet a profitable one, CFMS must rely on the money it has in its bank account. Should it run out of funding, it may look to public markets as a way to access cash. Should this be the case, dilution of existing shareholder value will be the result, leading to declines.
Sure, CFMS does come with risks, but the news today is exciting. With the approval in Australia, the company has a large new audience to dive into. Should the consumer adoption in Australia be positive, we can expect to see increasing revenues and potentially a move to profitability, making CFMS one for the watchlist.