Needham initiated coverage on Inari Medical Inc (NASDAQ:NARI), noting it as a leader in the very large and underpenetrated market for venous thrombectomy. 

Inari Medical projects an annual patient population of 280,000 with pulmonary embolism (PE) in the U.S., equating to a total available market (TAM) of $2.8 billion for its FlowTriever product. 

Additionally, the company estimates a yearly count of 430,000 patients with deep vein thrombosis (DVT), resulting in a $3.0 billion TAM for its ClotTriever product. The penetration rates for the PE and DVT markets are approximately 20% and 15%, respectively.

Needham initiates with a Buy rating and a price target of $72.

In late 2023, Inari Medical acquired LimFlow SA for $250 million in cash at closing and is eligible to receive up to $165 million in additional payments based on certain commercial and reimbursement milestones, for a total potential transaction value of up to $415 million. 

The analyst writes that Inari Medical presents a compelling acquisition opportunity. 

The company aligns with the criteria sought by major medical technology firms, boasting a robust gross margin of approximately 88%, anticipated double-digit revenue growth (projected at around 19% CAGR from 2023 to 2026), and a revenue size approaching $500 million in 2023. 

Furthermore, Inari Medical holds a prominent position in the high-growth venous thrombectomy segment. 

Needham identifies potential suitors for acquisition, including Abbott Laboratories Inc (NYSE:ABT), Becton, Dickinson And Co (NYSE:BDX), Boston Scientific Corporation (NYSE:BSX), Medtronic Plc (NYSE:MDT), Koninklijke Philips N.V. (NYSE:PHG), Stryker Corp (NYSE:SYK), Teleflex Inc (NYSE:TFX), and Terumo Corp (OTC:TRUMF) (OTC:TRUMY).

Needham writes that Inari Medical shares are attractively valued, trading at 5.1x its estimated sales for 2024, showing a 21% premium compared to similar small/mid-cap growth companies with a median estimated EV/S multiple of 4.2x. 

Additionally, Inari Medical shares exhibit a 9% premium compared to small/mid-cap companies in the cardiovascular and neuromodulation sector, with a median estimated EV/S multiple of 4.7x. 

Price Action: NARI shares are down 0.27% at $57.40 on the last check Tuesday.