ASX healthcare stock Saluda Medical Inc (ASX: SLD) has been drawing significant attention from brokers in recent weeks.
The growth stock is a commercial-stage medical device company. It is focused on developing treatments for chronic neurological conditions using its novel neuromodulation platform.
The company's first product, the Evoke System, is indicated as an aid in the management of chronic intractable pain of the trunk and/or limbs, including unilateral or bilateral pain associated with failed back surgery syndrome, intractable low back pain, and leg pain, and is designed to treat chronic neuropathic pain by providing spinal cord stimulation (SCS) therapy.
It hasn't been smooth sailing for this ASX healthcare stock in recent times. Its share price has tumbled 71% year to date.
However, Morgans sees major upside over the next 12 months.
Here's the latest from the broker.
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Solid FY26 for ASX healthcare stock
In a note out of Morgans this week, the broker said FY26 finished strong and mostly ahead of prospectus, but the more important development is showing greater visibility on the path to operating leverage.
FY27 guidance calls for 25% to 35% revenue growth, 50% to 52% gross margin, and a US$95 to $101 million adjusted EBITDA loss, with management expecting 90% of incremental gross profit to translate into adjusted EBITDA improvement.
Salesforce maturation is key, with 161 US reps at FY26 year-end, 55% fully trained and the majority of the remaining cohort expected to come online in 1HFY27. Growth looks set to come from higher productivity rather than simply adding headcount, with c30% of territories operating below a 40% fully loaded rep-cost/revenue threshold, providing evidence that the territory economics can work.
We see FY27 as the first meaningful test of the model's scalability, with higher physician utilisation, maturing territories and the CAP24 paddle lead providing potential upside to guidance. We adjust FY27-28 forecasts, with our DCF-based target price moving to A$2.17 (from A$2.94). SPECULATIVE BUY maintained.
This ASX healthcare stock closed trading yesterday at just over 41 cents per share.
The target from Morgans indicates an upside potential of 422%.
Other brokers also bullish
Morgans isn't alone in its outlook for this ASX healthcare stock.
The team at Bell Potter recently updated their price target to $1.60.
This indicates an upside of over 285%.
Speaking on the lofty target, the broker said:
SLD's US commercial execution continues to impress and accelerated considerably in recent quarters (34% US growth in Q3, 45% in Q4). Tailwinds continue to build following FDA approval of SLD's paddle lead in June and ~40% of the current sales force expected to complete training in FY27 and contribute to revenue generation. Real-world data continues to affirm Evoke's value proposition: greater efficacy durability means fewer reprogramming requirements and therefore greater revenue/rep compared to conventional devices.
