We came across a bullish thesis on Penumbra, Inc. (PEN) on Twitter by northeasternsvf. In this article, we will summarize the bulls’ thesis on PEN. Penumbra, Inc. (PEN)’s share was trading at $236.05 as of Nov 13th. PEN’s trailing and forward P/E were 271.32 and 64.10 respectively according to Yahoo Finance.
A close-up view of a technician wearing protective gloves while installing a mechanical thrombectomy system.
Penumbra, headquartered in Alameda, California, is a medical technology company that develops and markets products aimed at addressing diseases with unmet needs. The company focuses on cost-effective solutions in thrombectomy, access, embolization, neurosurgical, and immersive healthcare. It operates through direct sales in key markets, including the U.S., Europe, Canada, and Australia, as well as select international distributors. Penumbra has a strong history of innovation, especially in thrombectomy, and works closely with specialist physicians and healthcare providers to rapidly introduce new technologies.
One of the key drivers of Penumbra’s future growth is the superiority of its products. Since entering the thrombectomy space in 2007, the company has pioneered the Computer Assisted Vacuum Thrombectomy (CAVT) technology, which improves the speed, safety, and simplicity of clot removal. CAVT, particularly the Lightning Flash 2.0 system, is more efficient than traditional methods, offering faster clot removal and lower costs compared to competitors like Inari. With only around 20% market penetration, Penumbra has significant room to expand its share and increase prices, particularly given the technology’s superiority and cost-effectiveness.
In addition to its technological edge, Penumbra recently obtained CE Mark approval for its Lightning Flash 2.0 and Lightning Bolt 7 systems in Europe, marking a significant step in its international expansion. This approval opens the door to increased market share in the growing European thrombectomy market, which is expected to reach $0.46 Billion by 2029. Penumbra’s ability to provide faster, more effective clot removal solutions positions it well to challenge established competitors such as Inari, Boston Scientific, Medtronic, and Stryker.
However, Penumbra has faced challenges recently, particularly related to missed revenue guidance and a disappointing earnings track record. In response, management introduced a more conservative guidance approach in Q2 2024, which could signal a period of recovery. Despite these setbacks, Penumbra’s continued focus on its core thrombectomy business and strategic capital allocation for market expansion and R&D could help revitalize its growth trajectory. Moreover, the company’s decision to step away from the underperforming immersive healthcare segment, recognizing a significant impairment, could streamline operations and focus resources on its high-potential thrombectomy products.
Penumbra also faces risks, particularly from external factors like distribution issues in China, which led to a $20 million revenue reduction in Q2 2024. However, China represents only 2% of the business, and management is pivoting away from older products in favor of European launches. Additionally, the overall slowdown in MedTech growth has impacted Penumbra’s revenue projections. Despite these challenges, the company remains confident in its ability to drive long-term growth in thrombectomy, especially with new product launches and increased adoption in the U.S. and Europe. The future of Penumbra hinges on its ability to navigate these challenges, capitalize on its technological advantages, and expand its market presence.
Penumbra, Inc. (PEN) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held PEN at the end of the second quarter which was 32 in the previous quarter. While we acknowledge the risk and potential of PEN 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 PEN 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.