OrthoPediatrics (KIDS) Stock Forecast & Price Target

OrthoPediatrics Corp reported 4Q24 sales of $52.7 million, marking a 22% year-over-year organic growth, aligning with the company’s preannouncement expectations. The company experienced a significant increase in EBITDA margin, up 220 basis points year-over-year, alongside robust growth in its Scoliosis and Trauma & Deformity product lines, which saw sales growth of 61.8% and 34.5%, respectively. The positive outlook is further supported by the anticipation of sustained revenue growth, operating leverage improvements, and the expansion of its product portfolio, leading to expected high-teens organic growth starting in 1Q25.

The financial analysis indicates a negative outlook on OrthoPediatrics Corp due to a projected stagnation in gross margins, with expectations now set at 72%-73%, a decline from prior forecasts. Furthermore, the company's operating margin has significantly deteriorated to -26.7%, reflecting a decrease of 530 basis points year-over-year and raising concerns regarding cash burn and the sustainability of revenue growth. Additionally, with gross margins reported at 67.5%, well below consensus expectations, and a substantial reclassification of expenses contributing to this decline, the potential for future profitability appears diminished.