ClearPoint Neuro, Inc. (CLPT): A Bear Case Theory

We came across a bearish thesis on ClearPoint Neuro, Inc. (CLPT) on Twitter by Fierce_beast. In this article, we will summarize the bulls’ thesis on CLPT. ClearPoint Neuro, Inc.’s share was trading at $12.41 as of Oct 14^th.

ClearPoint Neuro ($CLPT) appears significantly overvalued, with a current price-to-sales (P/S) multiple of around 10x, nearly double what seems reasonable. The company has seen a 120% stock increase since July 2024, despite weak fundamentals over the past five years. Revenue has grown at a modest 23% CAGR, but gross margins have declined, and the company’s EBITDA, EPS, and cash flow are consistently negative. Shares outstanding have nearly doubled since 2019, leading to significant shareholder dilution, while the CEO’s decreasing ownership suggests a lack of confidence. ClearPoint’s partnerships, such as the recent phase 1 data announcement, have not been enough to justify the recent surge, especially considering the commercialization timeline remains years away.

The excitement around the company’s operating room expansion and laser therapy system is speculative. Competing against established giants like Abbott and Stryker in the highly competitive neurosurgery market is unlikely to be successful. Moreover, laser interstitial thermal therapy (LITT) is a niche, high-risk procedure. The company’s growing professional services business is not enough to justify the lofty valuation. Given these factors, $CLPT is a compelling short with a price target of $6, implying a 50% downside from current levels.

ClearPoint Neuro, Inc. is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held CLPT at the end of the second quarter which was 8 in the previous quarter. While we acknowledge the risk and potential of CLPT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CLPT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.