AI And CT Screening Will Expand COPD Care Worldwide

Key Takeaways

• Rapid expansion in lung screening and strong adoption in underpenetrated markets could drive much higher growth, margins, and market share than currently expected.
  
• Strategic ecosystem partnerships and a shift to value-based care position Pulmonx for sustained procedural growth, premium pricing, and durable competitive advantage.
  
• Pulmonx's revenue growth and profitability are threatened by slow US adoption, reimbursement risk, product concentration, shifting clinical trends, and pressure from larger competitors.

Catalysts

A commercial-stage medical technology company that provides a minimally invasive treatment for patients with severe emphysema, a form of chronic obstructive pulmonary disease.

• Analyst consensus anticipates gradual benefit from the integration of AI-driven tools like LungTraX Detect, but the magnitude and velocity of patient funnel expansion could be materially underestimated as CT-based lung cancer screening infrastructure accelerates, unlocking a step-function increase in the eligible COPD patient pool and driving sharply higher top-line growth and operating leverage in coming years.
  
• While consensus expects robust international expansion, it likely understates Pulmonx's ability to rapidly scale its presence in high-growth, underpenetrated markets like Japan and Asia Pacific given strong early adoption signals, regulatory momentum, and deepening provider partnerships, which could significantly outpace current revenue assumptions and strengthen margin profiles via greater manufacturing scale.
  
• Pulmonx's emerging "test and treat" ecosystem, driven by strategic alliances such as the Jaeger partnership to embed BLVR screening logic into millions of routine pulmonary function tests, has the potential to transform COPD diagnosis and intervention rates, leading to a sustained structural lift in annual procedure volumes, higher recurring revenues, and improved utilization of fixed operating expenses.
  
• The ongoing shift in hospital system priorities from volume-based to value-driven, minimally invasive care-coupled with the financial attractiveness and favorable reimbursement of Zephyr procedures-positions Pulmonx to become a standard of care in an expanding aged population, meaningfully increasing long-term procedure rates and driving material improvement in gross and net margins over time.
  
• Pulmonx's deepening first-mover advantage, supported by unmatched clinical trial data, reimbursement stability, and multichannel physician training infrastructure, presents a high competitive moat that should allow the company to capture premium pricing and outsize market share as healthcare systems consolidate, directly benefiting earnings and long-term cash flow growth.

Pulmonx Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Pulmonx compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Pulmonx's revenue will grow by 15.8% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Pulmonx will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Pulmonx's profit margin will increase from -62.9% to the average US Medical Equipment industry of 12.3% in 3 years.
• If Pulmonx's profit margin were to converge on the industry average, you could expect earnings to reach $17.4 million (and earnings per share of $0.39) by about August 2028, up from $-56.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 53.7x on those 2028 earnings, up from -1.1x today. This future PE is greater than the current PE for the US Medical Equipment industry at 28.0x.
• Analysts expect the number of shares outstanding to grow by 4.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.49%, as per the Simply Wall St company report.

Pulmonx Future Earnings Per Share Growth

Risks

• Pulmonx is experiencing slower-than-expected adoption of its procedures in the US due to complex patient selection criteria, lengthy hospital contracting processes, and the need for intensive physician and staff training, which may continue to hinder US revenue growth and delay profitability.
  
• Growing healthcare cost-containment pressures and dynamic reimbursement environments, as highlighted by ongoing dependence on Medicare and government reimbursement, pose a long-term risk of margin compression and unpredictable earnings if reimbursement rates are reduced or access is further limited.
  
• Heightened focus on preventative healthcare, remote disease management, and non-invasive diagnostics such as increased lung cancer screening may shift resources and clinical focus away from more invasive procedures like those utilizing Zephyr Valves, threatening the expansion of Pulmonx's core revenue base over time.
  
• Despite efforts to diversify, Pulmonx continues to derive most of its revenue from a concentrated product portfolio centered on Zephyr Valves, which exposes it to significant product-specific risks, elevating volatility in revenue and earnings if alternatives, disruptive technologies, or new clinical guidelines emerge.
  
• The company faces rising industry competition from larger medical device firms with greater commercial scale and resources, which could drive pricing pressure, reduce Pulmonx's market share, and challenge long-term revenue growth and profitability.

Valuation

• The assumed bullish price target for Pulmonx is $15.8, which represents two standard deviations above the consensus price target of $6.75. This valuation is based on what can be assumed as the expectations of Pulmonx's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $16.0, and the most bearish reporting a price target of just $2.5.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $140.7 million, earnings will come to $17.4 million, and it would be trading on a PE ratio of 53.7x, assuming you use a discount rate of 9.5%.
  
• Given the current share price of $1.55, the bullish analyst price target of $15.8 is 90.2% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.