Canaccord and BTIG start iRhythm at buy

Canaccord Genuity and BTIG initiated coverage of iRhythm Technologies (NASDAQ:IRTC) with “buy” ratings and price targets of $31 and $28, respectively. The stock closed at $24.23 on Friday.

iRhythm is a digital health care company redefining the way cardiac arrhythmias are clinically diagnosed. The company combines wearable biosensor devices worn for up to 14 days and cloud-based data analytics with powerful proprietary algorithms that distil data from millions of heartbeats into clinically actionable information.

“We believe that the company’s ZIO service is well positioned to capture meaningful share as a first-line diagnostic in a mature but sizable market of over $1.5-billion,” writes analyst Dr. Sean Lavin of BTIG.

“The combination of improved diagnostic yield, convenient device profile, and ‘soups to nuts’ offering to physicians and payers position the ZIO system as a golden mean between bulky, less reliable first-line diagnostics and costly, longer-term alternatives,” he added.

Jason Mills of Canaccord said he sees “material upside potential” as iRhythm drives a paradigm change from analog to digital in ambulatory electrocardiography (ECG) monitoring.

“iRhythm is just scratching the surface of the 4.6 million-plus ECG procedure TAM, with about a 4% share. The firm enjoys a huge trove of compelling clinical data (18-plus peer-reviewed studies), demonstrating ZIO’s superiority to Holter (yield, patient satisfaction, clinical decision making) across myriad settings (cardiology, ER, neurology),” he added.

Dr. Lavin said physician and patient convenience are key, with both driven by an easy to wear device and compact, neat report.

Most cardiologists and a growing body of studies tend to favor longer monitoring periods, having all data kept rather than just events, convenient data delivery, minimal external noise and easy wearability.

“We believe iRhythm’s offering successfully addresses many of these desires and this is confirmed by the company’s robust revenue growth,” Dr. Lavin added.