We came across a bullish thesis on ElectroCore, Inc. (ECOR) on Rogue Funds’ Substack by Jacob Rowe. In this article, we will summarize the bulls’ thesis on ECOR. ElectroCore, Inc.’s share was trading at $8.98 as of Oct 21st.
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ElectroCore is a biotechnology company specializing in non-invasive vagus nerve stimulation (nVNS) devices, designed to improve neurological and physiological functions through stimulating the vagus nerve. The company has seen rapid growth, with revenue increasing nearly 70% year-over-year and gross margins of 86%, highlighting its impressive operational performance. ElectroCore’s unique approach to nVNS through transdermal technology, rather than invasive surgery, is driving its success, with multiple product lines catering to different markets, including healthcare, military, and consumer wellness.
The flagship product, gammaCore, is FDA-approved to treat cluster headaches and migraines by stimulating the vagus nerve in the neck. Since its first approval in 2017, gammaCore has gained recognition as a reliable treatment option, with clinical trials showing significant improvements in migraine relief compared to placebo treatments. The device is prescription-based, costing $600 every three months without insurance, making it accessible for patients needing long-term treatment for headaches and migraines. Beyond its core healthcare use, gammaCore has evolved into a rugged version known as TAC-STIM, primarily designed for the military. Priced at $10,000 per device, TAC-STIM is used by the U.S. Air Force and is being tested for potential performance enhancement capabilities, which could unlock new ECORications for the device in high-stakes operational environments.
ElectroCore also offers Truvaga, a consumer-oriented vagus nerve stimulation device aimed at promoting general wellness. Truvaga comes in two versions: the original Truvaga 350, which offers 350 sessions and costs $300, and Truvaga Plus, which features unlimited sessions and app integration for $500. Both devices have shown positive impacts on mood, stress reduction, sleep quality, and overall well-being, with a significant percentage of users reporting benefits within just one month of use. Truvaga has also attracted attention from individuals dealing with less severe headaches, although ElectroCore does not officially market it for this purpose.
ElectroCore’s focus on non-invasive vagus nerve stimulation technology sets it apart from competitors in the field of neuromodulation, where many treatments require surgically implanted devices. The company’s patented technology (215 patents) delivers a proprietary signal to stimulate the vagus nerve through the skin, offering a less invasive and more convenient alternative to traditional methods. This transdermal approach has been widely accepted by patients and clinicians alike due to its ease of use and effectiveness.
ElectroCore (ECOR) currently has a market cap of $50 million and an enterprise value of $40 million. The company is poised for further growth thanks to its robust product lineup, ongoing clinical trials, and expansion into new markets, such as military wellness and consumer health. The company’s strategy to diversify its product ECORications, from medical devices to general wellness and performance enhancement, could drive significant revenue growth in the coming years. With its 70% year-over-year revenue growth and impressive gross margins, a conservative valuation approach suggests the company should trade at approximately 6x to 8x forward revenue, which translates to a market cap of around $240 million to $320 million based on projected revenues of approximately $40 million for 2025. This valuation seems low when compared to the discounted cash flow (DCF) analysis, which suggests a market cap of $435.42 million. This higher figure likely includes various assumptions.
While a $1 billion valuation is not out of reach over the next five years, especially if the company continues to deliver on profitability and mitigates dilution concerns, it is prudent to adopt a conservative stance. As such, settling on a $200 million valuation for now allows for adjustments as management executes its strategy and demonstrates growth. The potential for sustained 70%+ revenue growth exists, and with successful execution, ElectroCore could significantly increase its market cap in the coming years, making it a compelling opportunity in the innovative medical technology landscape.
ElectroCore, Inc. is also not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 1 hedge fund portfolios held ECOR at the end of the second quarter which was 1 in the previous quarter. While we acknowledge the risk and potential of ECOR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.