This Small Medical Stock Is Poised for Rapid Growth After $375 Million Projection
Smaller stocks are subject to mis-pricing in a volatile market environment.
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The bulls are back in charge on Monday morning, with 72% of stocks in positive territory and the Russell 2000 (IWM) and Magnificent Seven (MAGS) leading with gains of more than 1.2%.
My view of the market is that corrective action at this point would be a good technical setup for a year-end rally. We need to shake out some froth and allow the folks who don't like to chase an opportunity to buy.
JPMorgan Chase put it this way:
"A correction would be healthy as it would remove some of the froth in the market, setting the stage for the next phase of the rally. If a correction materializes, we would expect some large investors that have been waiting on the sidelines since April to buy-the-dip along with corporates and retail."
I am looking for some increased volatility in the next few weeks as earnings reports hit and there is more news on the trade situation with China. I plan on using the volatility to find entry points in less liquid stocks.
One example of a very thin name that I am buying on Monday on weakness is Delcath Systems (DCTH). Delcath has developed a system that delivers drugs for primary and metastatic liver cancers. This is a very expensive treatment, and there is some bumpiness in the business due to scheduling issues in the summer. That caused a drop in revenue guidance for the rest of the year. The company also announced strong results from a study that may allow it to expand beyond liver cancer. Wainwright reiterated its buy on the stock on Monday and revised its target price to $30.
Another stock on my radar is CorMedix (CRMD). I highlighted CRMD on September 7, and it has performed poorly since then. However, it is jumping higher on Monday after significantly increasing its revenue guidance for the remainder of 2025.
After years of development, CRMD received FDA approval for its DefenCath product in November 2023 and launched it in April 2024. DeFenCath is a solution that is injected into a catheter after each use. This injection blocks infection caused by catheters used in kidney dialysis. Treating infection in kidney dialysis is very costly, at an estimated cost of around $63,000. There are roughly 19 million outpatient dialysis treatments per year, so this is a very big market.
The company is currently in Phase 3 trials seeking FDA approval for an additional use of DeFenCath for feeding tubes that are inserted into the GI tract. This market is estimated to be about $200 million. There are several other catheter applications that are suitable for the DefenCath product.
Sales of DefenCath have exploded, going from $700,000 in the first quarter of 2024 and hitting $38 million in the June 2025 quarter. This growth is driven primarily by agreements with Large Dialysis Organizations (LDOs) such as Fresenius (FMS) and DaVita (DVA) , which control 91% of the U.S. dialysis market.
Shortly after announcing its supply deal with an LDO, CRMD surprised the market with a spot secondary of 6.6 million shares at an average price of $12.87 on June 27. The stock dropped sharply on the news and quickly broke pricing due to concerns about dilution. However, on August 7, it became clear that this offering was done in preparation for the acquisition of Melinta Therapeutics for $300 million. This deal was done to broaden CRMD's offerings beyond DefenCath. Melinta has six infectious disease products and an important Phase III study for Rezzayo expected in the first half of 2026. There are also several overlaps in marketing and sales that will make the deal accretive to earnings.
On September 2, CRMD announced that it sees pro forma revenues of $325 million to $350 million in 2025 and pro forma EBITDA of $165 million to $185 million.
On October 20, CRMD announced it sees third-quarter earnings of $100 million and guides to at least $375 million for the year.
CRMD had revenues in the first half of 2025 of $79 million. This guidance is a huge increase in revenues for the second half of the year. Analysts have yet to fully update guidance, but the currently published EPS is $1.79 for 2025 and 42% growth to $2.37 in 2026. That is a forward PE of just over 5, which is exceptionally low given the high level of EPS growth.
The stock has been very volatile and has pulled back recently. I suspect this may be due to moves made by Deerfield Management Company, which controlled Melinta. Deerfield and other institutional investors are holding $150 million in convertible debt that was used to finance the deal. There is likely some hedging of those positions, putting pressure on the stock. Also, there is some concern about reimbursement rates and potential competition.
D. Boral Capital increased its rating on CRMD to "Buy" following the increased guidance and put a $14 target on the stock, which is very low compared to other analysts. The analyst commented, "A combination of the pullback in the stock and strong Defend Cath revenues is a critical driver. We model multiple indications for Defend Cath. We select a 30% discount rate (r), given the small capitalization of the company and the associated risk. We apply these projections to our Free Cash Flow to the Firm (FCFF), discounted EPS (EPS), and sum-of-the-parts (SOP) models, which are equal-weighted, averaged, and rounded to the nearest whole number to derive our 12-month price target of $14.00."
Technically, the stock hit support at $10 on Friday and is in position to move back over its 50-day and 200-day simple moving averages.
There are quite a few stocks of interest developing as we head into earnings, but it is going to take some very active trading to capitalize on the fast moves.
At the time of publication, DePorre was long DCTH and CRMD.
