Initiate With a Buy Rating Based on Significant Unmet Need, Good Safety Profile, and Solid Pipeline Summary

We initiate coverage of NeurAxis, Inc., a growth-stage medical technology company developing neuromodulation therapies to address chronic and debilitating conditions in children and adults, with a Buy rating and a price-to-sales-based price target of $4.75. NeurAxis markets two FDA-cleared medical devices, IB-Stim and RED, each with significant market expansion potential.

Our rating is based on the view that NeurAxis occupies a market leadership position in applying Percutaneous Electrical NerveField Stimulation (PENFS) technology to the treatment of gastrointestinal conditions with large unmet clinical need.

Management has built significant momentum on two fronts: (i) expanding the company's customer base of gastroenterologists in children's hospitals and (ii) securing major insurance payer coverage to drive adoption of its technology. Together with expansion into additional disease indications in both the pediatric and adult markets, we see these factors driving revenue growth over at least the next two to three years.

The company’s current gross margin, 87%, is substantial, and its technology enjoys strong intellectual property protection. As a result, NeurAxis is well-positioned to capitalize on upcoming clinical and commercial catalysts. We predict that the company will achieve cash flow breakeven in 2027. While we expect the stock to appreciate significantly over the next 12-24 months, we also anticipate volatility that is typical of early stage, high-tech micro-cap companies.

Our $4.75 price target is based on a target price/sales multiple of 4.6x our FY26 revenue forecast of $8.0 million, assuming 7.8 million shares outstanding.