This ASX biotech could rise 40% or 750%, depending on who you ask

EBR Systems Ltd (ASX: EBR) disappointed investors this week when it announced it had implanted just 40 WiSE systems during the quarter, below its own forecast.

The company’s shares are now down almost 90% over a 12-month period, but according to the analyst teams at both Bell Potter and Morgans, there’s upside to be had from there.

It’s just that the two brokers differ wildly on how much upside there will be.

Quarterly report fell short of expectations

I’ll get to the specifics of their predictions shortly. First let’s have a closer look at what the company reported this week.

EBR Systems has developed the world’s only wireless cardiac pacing device for heart failure – the WiSE system – and is in the early stages of its commercial roll out.

In the third quarter the number of implantations was below previous quarters, with the company saying a change in management at its US operations, a change in strategy, and additional field training requirements led to the decline.

EBR systems said it was recruiting to build out its commercial team in the US, with numerous searches under way.

The company said:

EBR continues to refocus field management and activities around deeper utilisation within activated accounts, increased procedural frequency and strengthened field training and support. These initiatives are intended to strengthen U.S. commercial execution, with benefits expected to build progressively as additional field training is completed and account activity increases.

During the quarter EBR also completed the final tranche of a $150 million capital raising.

Shares looking cheap, or very cheap

Morgans said in its research note on the company that it understood a new sales strategy was needed.

They said:

Notably, WiSE adoption requires a sustained, high-touch sales effort, with representatives previously focused on prioritising the opening of new sites rather than supporting existing accounts and generating repeat procedures. Management is redirecting resources towards activated centres, strengthening territory accountability and changing its sales training model, with early feedback encouraging.

Morgans said there was little visibility of sales going forward, with the company reporting encouraging signs in early October, but giving no formal guidance.

They added:

We continue to see value in WiSE’s differentiated technology, clinical utility and substantial potential market opportunity. However, disappointing execution, greater commercial intensity and uncertain adoption trajectory warrant more conservative forecasts and a materially lower valuation. We see the potential for a recovery in commercial momentum, although the investment case now hinges on evidence of execution rather than the theoretical size of the opportunity.

Morgans lowered their price target from $1.95 to $1.20, which is still 757.1% higher than the current price of 14 cents.

Bell Potter, on the other hand, lowered their price target from 70 cents to 20 cents, which would be a 42.9% return if achieved.

EBR Systems is valued at $131 million.

The post This ASX biotech could rise 40% or 750%, depending on who you ask appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.