Canaccord raises iRhythm stock price target on strong margins

Canaccord upgraded its price target for iRhythm Technologies (NASDAQ:IRTC) to $206 from $196 following strong third-quarter results. The firm maintained a Buy rating, citing the company's impressive adjusted EBITDA margin of 23.1%, or $51.2 million, which surpassed the firm's expectations of 12.5% and the consensus estimate of $27.6 million. iRhythm reported revenue of $221.6 million in Q3, marking a 14.9% year-over-year growth, which aligned closely with the company's guidance range of $221 million to $223 million.

The firm's gross profit margin remains robust at 71%. Despite its profitability, iRhythm has not been profitable over the past twelve months, but analysts anticipate profitability in the current year. Management reported raising its fiscal 2026 guidance to account for the inclusion of VitalConnect, which completed its spin-off on October 5, and continued robust profitability.

While Zio AT revenue remained flat year-over-year, pending the integration of VitalPatch with the Zio platform, expected in mid-2027, the company has extended its Zio MCT FDA submission to 2027. Analysts project approximately $1 billion in organic revenue and an adjusted EBITDA margin of at least 15% for 2027. With a market capitalization of $4.3 billion and revenue growth of 26% over the past year, iRhythm's stock is currently favored with a Strong Buy consensus among analysts.