William Blair & Company initiated research coverage of Eargo, Inc. (EAR $34.75). A direct-to-consumer telehealth company, Eargo offers a hearing aid solution within the potential $30 billion domestic total addressable market.
Analyst Margaret Kaczor estimated the company is positioned to deliver 30%-plus top-line growth over the next several years, forecasting revenue of $64 million in 2020, $83.3 million in 2021, and $108.6 million in 2022.
“Eargo has entered a mature hearing aid industry that has lacked innovation,” Kaczor said. “The company sells its hearing aids directly to patients rather than to third-party distributors and brick-and-mortar–based audiologists and has designed its products to benefit and fit the majority of patients without requiring multiple in-office visits. In a market of 48 million people with hearing loss, there is a lot of potential for Eargo to enter with a hearing aid that patients will want to wear and is easy to obtain, at the convenience of home, putting telehealth at the forefront. We believe Eargo’s nearly invisible hearing aids can expand the market and allow the company to gain share, as 85% of today’s sales come from visible hearing aids. Since beginning to sell hearing aids in 2017, when commercialization started to accelerate, Eargo has introduced four hearing aid devices, each model with more technological and consumer-focused advantages. Its next-generation Eargo 5, launching in mid-2021, is even smaller with better sound/product quality and will enable in-situ screening and adjustments. In addition, Eargo’s recent entrance into the insurance channel has been a key demand accelerator.”
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