Wednesday, July 15, 2015

Seeking Alpha: AtriCure Has Earned Its Multiple

It's hardly a household name, but AtriCure (NASDAQ:ATRC) is a good example of how success rarely goes unrewarded by the Street for too long. The company has done a good job of driving utilization of its surgical ablation tools, and is still ramping up its left atrial appendage exclusion device. As surgeons become increasingly familiar with the procedures, cardiologists, electrophysiologists, and surgeons increasingly coordinate their continuum of care and overall recognition of the danger of untreated/under-treated atrial fibrillation grows, I expect AtriCure to log many years of double-digit growth. Add in the potential of minimally invasive procedures, and I believe this is a company looking at $125 million or so in revenue this year and $2 billion in addressable revenue less than a decade from now.

Companies rarely capture 100% of their available market, and I expect the same from AtriCure. That said, this is a company that has shown that it can drive adoption of its products without the help of a large sales infrastructure, and I still believe a larger medical technology company could look at this as a low-risk/high-return M&A candidate. As the stock is trading about midway between its standalone value and its M&A value (with possible upside from a motivated buyer), I don't see it as a terrific bargain, but it does likely still have some upside from here.

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AtriCure Has Earned Its Multiple

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