When it comes to penny stocks, high risks often go hand in hand with the potential for high rewards. These stocks typically trade below $5, and their low prices can lead to rapid gains, especially when a lesser-known stock surprises the market. While many investors steer clear of such volatility, the opportunity to turn a small investment into significant returns is hard to ignore.
One stock that has caught the attention of market watchers in 2025 is Neuronetics (STIM). With impressive 170% year-to-date gains, STIM has rapidly emerged as one of the standout performers in the penny stock arena. Analysts are beginning to take note of its robust rally, suggesting that the momentum could continue, potentially pushing the stock even higher. The company’s operational fundamentals and recent surge in share price indicate that, despite the typical risks associated with penny stocks, there may be a compelling growth story unfolding here.
About STIM Stock
Valued around $141 million by market capitalization, Neuronetics (STIM) is a commercial-stage medical device firm dedicated to innovating, developing, and marketing advanced solutions for individuals with psychiatric disorders. Its flagship offering, the NeuroStar Advanced Therapy System, delivers transcranial magnetic stimulation (TMS) treatment specifically for depressive disorders.
From its 52-week low of $0.52, the stock skyrocketed approximately 740%, driven by strategic initiatives. Neuronetics’s transformative acquisition of Greenbrook TMS has significantly expanded its market presence and bolstered revenue forecasts, fueling this impressive growth.
Despite the rally, shares are still trading at an attractive valuation. With a 2x price-sales ratio, they’re offering nearly a 40% discount relative to the sector median of 3.41x.
STIM Delivers Strong Q4 Results
On March 4, the medical firm reported its Q4 and full-year results for 2024. Neuronetics closed Q4 2024 with a strong revenue performance. The company posted revenue of $22.49 million, marking a 10.7% year-over-year increase and beating estimates by $3.51 million. This strong performance was driven by notable treatment volume improvements.
Its GAAP EPS came in at a loss of $0.33, missing expectations by $0.09.
Neuronetics also made some key developments during 2024, such as receiving FDA clearance for NeuroStar Advanced Therapy in adolescents and the accelerated rollout of the Better Me Provider program. With increased system utilization and market expansion in international territories like Japan, Neuronetics is well-positioned to capitalize on growing treatment demand and further drive revenue growth in the coming quarters.
Also, Neuronetics has completed its acquisition of Greenbrook TMS, merging two top mental health device companies to boost revenue growth and streamline costs. CEO Keith J. Sullivan announced that over $22 million in annual cost synergies have been identified, with more than 90% already implemented.
Looking forward, Neuronetics has set robust guidance for the upcoming periods. For the first quarter of 2025, the company anticipates total worldwide revenue to be between $28 million and $30 million. For the full fiscal year 2025, revenue is projected to range from $145 million to $155 million, with an expected gross margin of approximately 55%. Operating expenses are forecast to fall between $90 million and $98 million.
Analysts tracking the company expect Q1 revenue to hit around $29 million, with EPS improving modestly to a loss of $0.12 per share.
What Do Analysts Think About STIM Stock?
Wall Street analysts are highly optimistic about STIM stock, awarding it a consensus “Strong Buy” rating. Among of the four analysts covering the stock, three recommend a “Strong Buy,” while one gives a “Hold” rating.
With a mean price target of $6.83, analysts believe the stock could surge by approximately 56% from its current levels.
This penny stock is on a steady rally, aiming to transition into a blue-chip powerhouse. It is shedding its speculative past by building a solid foundation through strong revenue growth and breakthrough innovations. As analysts predict significant upside over the next 12 months, I suspect this stock could be a multi-bagger opportunity for investors. Yet, risks remain.
