Semler Scientific (SMLR), mcap=$259m, price $38.02 vs $31.45

$SMLR pitch:
– Medical device company with a QuantaFlo product for detecting Peripheral Artery Disease (PDA).
– The product is easier to use and lower cost compared to other PDA testing methodologies.
– Studies have shown that QuantaFlo is at least as good as other testing alternatives.
– The upside is based on continued gradual penetration increase and revenue growth.
– PDA is a chronic disease that so far goes undetected in c. 30% of a given doctor’s older population.
– Bearish concerns of QuantaFlo being to-good-to-be-true or regarding lack of clarity if insurers will compensate testing are overly exaggerated.

$SMLR valuation:
– Stock price is down 80% from recent highs.
– DCF model base case with 13% rev growth results in the target of 4-5x market cap.
– A lower growth case with 5% revenue growth results in value at 2x of the current market cap.

Exp. gain: 2x-5x

Full $SMLR write-up (free guest account required):

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