Analysts expect Zynex Inc (NASDAQ:ZYXI) to return to stronger growth in 2025, driven by product diversification, sales force expansion, and upcoming product launches.
The company’s strategic initiatives are seen as laying the groundwork for long-term success despite short-term hurdles.
During its most recent quarter ended June 30, 2024, Zynex saw a 20% increase in orders for its pain management products, bolstering the long-term view.
The company has been working to diversify its product mix, which led to short-term softness in revenue.
In Q2, 28% of orders came from private-label rehabilitation products, compared to 25% in Q1.
RBC noted that Zynex’s shift towards a mix of private-label rehab products, though impacting short-term revenue, is a strategic move to diversify and stabilize revenue streams for long-term growth.
RBC has a Buy rating on Zynex’s stock along with a $12 price target.
Diversifying product revenue will have longer-term benefits, analysts at Landenburg noted.
Zynex plans to submit an application for FDA clearance of their laser-based pulse oximeter, known as the NiCO, by the fourth quarter of 2024. This new product, which monitors multiple hemoglobin types using laser-based technology, is expected to open new market opportunities.
“NiCO remains a compelling growth opportunity for more diversified revenues and expansion into new and large markets,” Landenburg wrote.
Landenburg rates Zynex as a Buy with a price target of $24.50.
While Zynex is focusing on expanding its product offerings and tapping into new markets with innovations like the NiCO, analysts also noted the company's ongoing adjustments to its sales force are also contributing to its strategic realignment.
Zynex reduced its sales force by 10% during Q2 2024, lowering the number of sales representatives to approximately 400, down from 450 at the end of Q1 2024. Despite the reduction, order growth remained robust, reflecting increased productivity among the remaining sales reps.
Ladenburg analysts highlighted that the average revenue per representative stayed steady at $425,000.
Zynex plans to gradually rebuild its sales team in 2025, with a target of reaching 800 representatives, which analysts believe will support renewed growth.