TCMD - Embedded Expectations Analysis - 2019 03 26
Tactile Systems Technology, Inc. (TCMD:USA) currently trades above recent averages relative to UAFRS-based (Uniform) Earnings, with a 77.2x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, however management has concerns about their ability to sustain Flexitouch sales growth, Flexitouch product launches, and their Aero-Wrap partnership.Specifically, management may lack confidence in their ability to sustain Flexitouch system sales growth, benefit from revenue growth tailwinds, and offset pricing headwinds through volume increases. In addition, they may be concerned about the commercial launch of Flexitouch Plus and their ability to expand the commercialization of Flexitouch Head and Neck products. Moreover, they may be concerned about their Aero-Wrap partnership, and may be exaggerating their Airwear compression system capabilities and its ability to expand lymphedema patient access.
Tactile Systems Technology is a medical technology company that develops and provides medical devices for the treatment of chronic diseases. The company is the manufacturer and distributor of the Flexitouch and Entre systems, medical devices that help control symptoms of lymphedema, a chronic and progressive medical condition, the Actitouch system, a medical device used to treat venous leg ulcers and chronic venous insufficiency, and the Airwear wrap, a medical device used for the management of venous insufficiency, venous hypertension, venous ulcerations and lymphedema. The company provides its products for use in the home and sells them through vascular, wound and lymphedema clinics.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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