Stephens raised its price target on Establishment Labs Inc. to $90 from $85 while retaining an Overweight recommendation, citing a set of fourth-quarter 2025 results that the firm described as materially stronger than prior trends.
Establishment Labs reported revenue of $64.6 million for Q4 2025, representing a 45% increase versus the year-ago period. U.S. revenue for the quarter was $17.3 million. The company also posted an expansion in gross margin, up 200 basis points to 70.5%, which Stephens attributed to a favorable mix driven by U.S. sales.
Shares of Establishment Labs have appreciated substantially over the past year, rising 123% to $79.67 and trading close to the 52-week high of $79.90. At that level the company carries a market capitalization of $2.32 billion.
Adjusted EBITDA returned to positive territory for the second consecutive quarter with a $5.5 million result. Management issued guidance for 2026 revenue in a range of $264 million to $266 million, which corresponds to year-over-year growth of 25% to 26%. The company also expects adjusted EBITDA to be positive each quarter in 2026.
While endorsing the revenue and margin momentum, Stephens flagged valuation as a constraint on near-term upside. The firm noted that shares are trading at above nine times projected 2026 revenue. An analysis available on InvestingPro similarly highlighted a high revenue valuation multiple and described the stock as appearing overvalued at current levels. Stephens said it would consider deploying capital into the stock if a pullback presented a more attractive entry point.
The reporting analyst outlined a thesis that supports continued durable growth, projecting a multi-year runway of more than 25% annual expansion. The model rests on assumed gains in U.S. market share, acceleration of revenue from new product introductions, and sustained momentum in direct international markets. Those factors are expected to contribute to structural profitability improvements over the coming years.
Separately, Establishment Labs posted fourth-quarter 2025 earnings per share of negative $0.09, a marked improvement versus the projected negative $0.22, equating to a 59.09% positive surprise relative to that expectation. Revenue of $64.6 million also exceeded the anticipated $63.75 million. Despite these upside surprises versus analyst projections, the stock fell in pre-market trading following the release.
Summary of developments
- Price target raised to $90 from $85; Overweight rating maintained.
- Q4 2025 revenue of $64.6 million, up 45% year-over-year; U.S. revenue $17.3 million.
- Gross margin expanded 200 basis points to 70.5% and adjusted EBITDA turned positive at $5.5 million for the second consecutive quarter.
- 2026 revenue guidance of $264 million to $266 million, implying 25% to 26% growth and quarterly positive adjusted EBITDA.
Context for investors
The balance of accelerating top-line growth, margin expansion, and consecutive quarters of positive adjusted EBITDA underpins Stephens' decision to raise its target. At the same time, the stock's valuation relative to consensus 2026 revenue introduces a constraint, according to the firm.
Investors weighing exposure to Establishment Labs should consider both the operational momentum and the valuation premium the market is assigning ahead of the 2026 guidance period.