BrainsWay: The Small-Cap Medical Device Stock with Big Potential for 2024

How This Under-the-Radar Stock Surged Over 162% in 2023 and What Analysts Forecast for the Year Ahead

While BrainsWay Ltd. (BWAY) may not be a household name in the world of small-cap stocks, it certainly made a name for itself in 2023. This relatively obscure stock, trading at less than $10, managed to soar by an impressive 162% over the course of the year. But the real question is, can BrainsWay continue its upward trajectory and deliver significant returns in 2024? In this article, we delve into the details of BrainsWay’s success story, its innovative medical technology, and the promising forecasts put forth by analysts.

BrainsWay: Pioneering Medical Device Innovation

Deep Transcranial Magnetic Stimulation (Deep TMS)

BrainsWay is a medical device company that specializes in the development and marketing of Deep Transcranial Magnetic Stimulation (Deep TMS) systems. These cutting-edge systems are designed to treat a range of mental health disorders. Deep TMS technology utilizes controlled magnetic pulses to effectively address conditions such as depression, obsessive-compulsive disorder (OCD), and even smoking cessation, all backed by the stamp of approval from the U.S. Food and Drug Administration (FDA).

Expansion and Success Stories

South Korea Market Expansion

One of the significant milestones for BrainsWay in 2023 was the expanded availability of its Deep TMS technology in South Korea. The company’s relentless efforts and growing momentum have resulted in recent sales that are poised to increase BrainsWay’s installed base in the country to over 20 Deep TMS systems. This expansion aims to provide more individuals with access to cutting-edge mental health treatments. Hadar Levy, Chief Executive Officer of BrainsWay, expressed his satisfaction, emphasizing the positive impact the technology is already having on mental health patients in South Korea.

Collaboration in the Western U.S.

Further underscoring its commitment to improving mental health, BrainsWay announced increased collaboration with a prominent mental health treatment provider based in the Western region of the United States. This ongoing partnership has seen successive orders of Deep Transcranial Magnetic Stimulation systems, with the most recent delivery bringing the provider’s total installed base to seven units. Plans for additional expansion are also on the horizon, marking a strategic move to increase access to non-drug mental health treatments for underserved indications such as depression and obsessive-compulsive disorder.

Blue Cross Blue Shield of Louisiana

BrainsWay announced that Blue Cross Blue Shield of Louisiana, BCBS of LA, has joined the list of payors reducing the patient eligibility requirements for transcranial magnetic stimulation, TMS, treatment from four failed medication trials to two. With 1.9 million covered lives, BCBS of LA provides coverage for more than 40% of Louisiana’s residents. “We applaud BCBS of LA’s dedication to advancing mental health coverage and facilitating improved outcomes for individuals grappling with mental health conditions,” said Hadar Levy, CEO of BrainsWay. “Treatment-resistant depression patients often spend years of treatment and trials with limited relief, and this policy update will effectively reduce the barriers for these patients in gaining earlier access to our life-changing technology.”

BWAY’s Remarkable Performance in 2023

Standout Gains in 2023

The year 2023 was undeniably a standout year for BrainsWay as it managed to achieve remarkable gains. The stock surged by an impressive 162% during this period, attracting attention and investor interest. Several factors contributed to this outstanding performance, including increasing sales, a growing market presence, positive clinical results, and a flurry of positive attention from analysts.

Financial Strength and Improvements

BrainsWay has also demonstrated financial strength in recent quarters, reporting higher revenues and reduced losses. In the third quarter of 2023, the company reported a loss per share of just $0.01, surpassing analyst expectations that estimated a loss of -$0.07. Additionally, BrainsWay’s revenue for the same period reached $8.3 million, exceeding expectations.

Analyst Forecasts and Growth Potential

Promising Projections for 2024

For fiscal year 2024, analysts are optimistic about BrainsWay’s prospects. They anticipate further narrowing of losses, with revenue expected to grow by a robust 14.5%, reaching nearly $36 million. What’s particularly appealing for investors is the stock’s reasonable valuation, with a forward price-to-salesThe Price-to-Sales (P/S) ratio is a fundamental financial metric that provides valuable insights into a company's valuation. This ratio, often used by investors and analysts, compa... More ratio of approximately 3x, aligning well with its growth potential.

EPS and Revenue Growth

Analysts also predict a substantial growth in earnings per shareEarnings per share (EPS) is a fundamental financial metric that provides valuable insights into a company's profitability. This widely used indicator helps investors and analysts g... More (EPS) for BrainsWay. Over the next five years, the EPS is projected to increase by an impressive annual rate of 30.57%. Additionally, revenue is expected to experience a solid growth rate of 18.77% on average over the same period.

Analyst Sentiment

While BrainsWay may have a limited number of analysts covering its stock, the sentiment is overwhelmingly positive. All four analysts currently covering BWAY have assigned it a unanimous “Strong Buy” rating. In recent reports, Northland Securities raised its price target for BrainsWay from $5.50 to $9, citing the company’s strong execution and indications of robust demand.

Northland Securities Analysis of BrainsWay

Northland raised the price target for Brainsway to $9 from $5.50 and maintains an Outperform rating. The analyst believes the company is executing well after its Q3 report. The firm expects strong systems placements due to recent customer wins, increasing demand, and improved access and reimbursement.

Price Targets

The average price target for BWAY stands at $9.60, implying an expected upside of 48%. However, the most bullish projection comes from H.C. Wainwright, with a target of $12, suggesting an astonishing 85% surge from the current stock price.

BrainsWay – A Hidden Gem with Potential

Bottom-line: As 2024 unfolds, BrainsWay Ltd. (BWAY) emerges as a hidden gem in the small-cap stock landscape, with a remarkable performance in 2023 and promising prospects ahead. Its innovative Deep TMS technology, successful market expansions, financial strength, and optimistic analyst forecasts position BrainsWay as a compelling investment opportunity. While small-cap stocks may come with increased risk, the potential rewards for investors in BrainsWay appear to be substantial.