Large Opportunities And High Expectations Battling It Out At Intersect ENT

The history of Intersect ENT (XENT) should look very familiar to long-term investors in the med-tech sector. This company came to the market all shiny and new in 2014 with an interesting, differentiated product for an underserved market (chronic sinusitis) that offered $1 billion-plus revenue potential. The stock more than doubled in its first year, but then the pace of revenue growth couldn't match what was laid out in the initial sell-side models and the shares lost almost two-thirds of their value.

Since the shares hit a late 2016 low, though, the company has been executing well. Although penetration/usage rates are slower than what was hoped for back in 2014, the pace of growth still isn't bad and the company is about to launch a new product that could add over $1 billion to its addressable market. A forward EV/revenue multiple of around 9x tells you the sort of growth expectations that are in place, but the underlying valuation isn't so unreasonable compared to the long-term opportunity.

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Large Opportunities And High Expectations Battling It Out At Intersect ENT