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Silk Road Medical Targets Stroke Reduction

Based in Sunnyvale, California, Silk Road Medical (SILK) is a medical device company focused on reducing the risk of stroke and its devastating impact, explains Steve Silver, an analyst with Argus Research.

The company has pioneered a new approach for the treatment of carotid artery disease called TransCarotid Artery Revascularization (TCAR).

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TCAR combines the surgical principles of neuroprotection with minimally invasive endovascular techniques to treat carotid artery blockages that may cause strokes.

We believe that the company is in the early stages of its growth cycle, as it builds out its U.S. commercial infrastructure to support TCAR.

TCAR has significant advantages over the standard surgical treatment of blockages through carotid endarterectomy (CEA), as it has been shown to reduce the average length of hospital stays and lower the risk of repeat admissions.

Moreover, given the high medical costs of treating stroke, we think that TCAR is likely to become the preferred option for hospitals and insurers as long as follow-up data continues to show the benefits of the procedure.

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Silk Road, which went public in April 2019, is not yet profitable and the shares are not cheap. Based on projected sales of key products and discounting the estimated earnings adjusting for the company’s acquisition potential, we obtain a value for SILK near $52 per share, which we take as our target price.

 We caution, however, that any unexpected negative developments for TCAR could result in a sharp selloff. In all, we view SILK shares as appropriate only for risk-tolerant investors.

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