Why Neuronetics Blasted 39% Higher Today | The Motley Fool

What happened

Neuronetics (NASDAQ:STIM), a company that focuses on what it describes as “products that improve the quality of life for patients who suffer from psychiatric disorders,” shot 39% higher on Tuesday. Investors were likely impressed by the company’s potential as indicated in its first-quarter results.

So what

Neuronetics earned $12.3 million in revenue for the quarter, 7% higher on a year-over-year basis. As is its habit of late, the healthcare company posted a net loss. However, this narrowed to just under $7.9 million ($0.31 per share) from the Q1 2020 shortfall of $12.6 million.

Image source: Getty Images.

Both headline figures beat the average analyst estimates of $11.6 million for revenue and a bottom-line deficit of $0.33 per share.

Neuronetics specializes in transcranial magnetic stimulation (TMS) in which magnetic fields are used to stimulate nerve cells located in a part of the brain associated with mood in order to help alleviate clinical depression.

With depression apparently on the rise due to the psychological effects of the coronavirus pandemic, Neuronetics is experiencing significantly higher demand for its TMS therapy. The company reported that it has witnessed a 30% rise in patients requesting appointments.

Now what

Neuronetics has increased its guidance for full-year 2021: Revenue should be $59 million to $63 million, up from the previous $58 million to $62 million estimate. A profitability estimate wasn’t provided. 

Regardless, investors like the sound of a 30% demand rise; it’s no wonder that the stock rose at a rate not far from that figure.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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