Investing

Zynex Gets a 14% Boost on Robust Third Quarter Earnings And Full Year Outlook

Ben Ward

Published: October 31, 2022 3:11 am

Last Updated: October 31, 2022 12:41 pm

Shares of med tech firm Zynex (US:ZYXI) closed on Friday with a 14% gain after trading as high as 18.3% higher at $10.90 shortly after the open. The strong finish to the week pushed Zynex’s stock into positive territory for 2022 with a 12.5% gain year to date.

Zynex produces medical devices for pain management, rehabilitation, and patient monitoring.

For the third quarter, Zynex grew sales by 19% over the year to $41.5 million which was as expected by the street.

While sales were able to grow over the year, net income contracted 20% to $4.9 million as cost inflation filtered through to the bottom line result. The primary drivers of the cost growth came from sales and marketing expenses rising 31.5% to $17.2 million, while general and admin costs rose 37.2% to $9.4 million.

Zynex’s president and CEO Thomas Sandgaard discussed how the quarter broke records in terms of order growth rising 34% year over year with continued strong cash flows which allowed the company to complete another stock buyback worth $10 million.

Management provided narrowed guidance for the fourth quarter and full year during the result to investors as they have high visibility of earnings for the remainder of the year.

For the full year, Zynex now expects that it will generate $157.4 to $160.4 million in sales and $26.7 to $28.7 million in adjusted EBITDA. The midpoint of the guidance was fairly in-line with consensus expectations which is why the investor response in the share price was well received with a strong rally.

A chart from the Fintel financial metrics and ratios page for ZYXI shows the growth in the firm’s revenue and profitability over the last few years.

Yi Chen from HC Wainwright & Co believes Zynex will continue to grow its sales team gradually over the next year and thinks the business has the ability to grow sales by more than 20% during the year. Chen remains upbeat on the future prospects of the business and increased his target price from $20 to $21 for his “buy” recommendation on the stock.

Elsewhere, analyst Jeffrey Cohen from Ladenburg Thalman pointed out that the revenue growth was driven by the greater sales representative productivity. Cohen believes the company is undervalued as it continues to succeed on multiple fronts and has a “buy” call and strong $28.50 price target on the stock.

ZYXI on average has an “overweight” recommendation and an average $18 price target across the market.

The strong result and outlook has helped ZYXI continue to trend higher with strong momentum. The ZYXI stock price has more than doubled from its annual low point in March 2022 of around $5 per share.

The stock screens very highly on Fintel’s six-month momentum indicator with a score of 88.94. Zynex ranks in the top 7% when screened against 41,700 other global companies for six month momentum.

This article originally appeared on Fintel