TMDX - TransMedics: Strong Business Fully Valued Stock

2024-03-22 08:15:01 ET

Summary

• TransMedics is a rapidly growing provider of organ transplant services, including perfusion devices and transportation.
• Growth should continue to be robust, driven by market share gains, vertical integration, international expansion and support for more organ types.
• TransMedics' valuation is relatively high, creating substantial downside risk. The stock should continue to perform reasonably well though due to growth and the transition to profitability.

TransMedics (TMDX) provides services that assist organ transplantations, including perfusion devices and transportation. The company has achieved rapid growth in recent years on the back of technology which improves the utilization of organs and creates better clinical outcomes. Growth is likely to remain robust going forward, driven by increased market share and vertical integration to capture more of the value chain. While TransMedics' valuation is relatively high, expansion into new organs (particularly kidneys) could still result in strong returns.

Market

The incidence of end-stage organ failure is increasing globally, driving demand for organ transplants and transportation. Supply is restricted though, in large part due to the inability to get functioning organs from donors to recipients. Cold storage is generally used to preserve organs during transplantation, but this approach has limitations. For example, the lack of oxygenated blood during transportation can cause significant damage and doesn’t allow physicians to assess organ viability....

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