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Shares of medical device company Profound Medical Corp. (PRN-T; PROF-Q) jumped by as much as 13 per cent on Thursday after it announced a large multi-site agreement with a diagnostic imaging company.

The stock is still down about 30 per cent from the all-time highs reached earlier this year, when analysts say medical technology stocks, along with those in the pharmaceutical and biotech sectors, were soaring.

“Also, the stock tends to do well early in the year which corresponds to several important healthcare investor conferences,” Paradigm Capital analyst Scott McAuley said in an email to the Globe.

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The Toronto-based company’s shares climbed to US$20.57 in early trading on the Nasdaq, up 13 per cent from Wednesday close of US$18.19. It was trading up 8 per cent at around US$19.66 midday. The stock reached a record US$28.97 in February.

In Toronto, the stock rose to $24.95 on Thursday, up 10 per cent from Wednesday’s close of $22.50. It was trading up 7 per cent at around $24 midday. The stock hit a record of $36.73 on the TSX in February.

Before markets opened on Thursday, Profound Medical announced an agreement with Akumin Inc. (AKU-T) for 10 of its TULSA-PRO installations, with the first expected in the fourth quarter.

Akumin owns and operates a network of 125 diagnostic imaging centers across seven U.S. states. The initial focus will be in Florida followed by Texas and Pennsylvania, the company stated, and it hopes to expand beyond the agreement.

“We believe that Akumin will be a particularly strong partner for us given its strategy to become a leading full-service provider of men’s health and its geographic density in Florida, one of the largest markets for prostate care in the country,” Profound chairman and CEO Arun Menawat stated in a release.

Profound Medical makes the TULSA-PRO and Sonalleve image-guided devices. The TULSA-PRO, approved by the U.S. Food and Drug Administration, is used for treating prostate cancer as well as enlarged prostate. Sonalleve is used for palliative pain treatment of metastatic bone disease.

Paradigm Capital’s Mr. McAuley, who has a “buy” rating and US$29.50 target price on the stock, says the deal announced Thursday is the second and largest multi-site agreement the company has signed with a diagnostic imaging company. He notes the first was with RadNet Inc. (RDNT-Q) signed last year.

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In a note to clients, Mr. McAuley said he’s expecting 18 new sites this year, including the two currently online. He expects the company to discuss the agreement in more detail when it reports first-quarter earnings on May 12.

Mr. McAuley expects the company to report US$3.6-million in revenue from its existing installations. The company reported revenue of $1.6-million (Canadian) in the first quarter last year. (The company switched its reporting to U.S. dollars starting in 2021).

Cowen analyst Joshua Jennings, who has an “outperform” (similar to buy) recommendation and US$28 target price on the stock, said in a note to clients that he expects the new partnership with Akumin “will add to the momentum of the U.S. TULSA-PRO launch, and provide investors with more confidence in the trajectory of Profound’s U.S. business.”

He noted the launch has seen disruption from the pandemic, but Profound Medical “has continued to see interest from all three of its key sales channels. These include early adopter entrepreneurial urology practices, imaging center companies like RadNet and now Akumin, and opinion-leading teaching hospitals.”

“This is the beginning of the [second half of 2021] install surge we were looking for,” Raymond James analyst Rahul Sarugaser said in a note to clients regarding the Akumin announcement.

He has a “strong buy” on the stock and recently increased his target to US$36 from US$34.

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“While the pandemic had, indeed, hindered PROF’s ability to get boots on the ground to physically install TULSA devices in hospitals and imaging centres, the company has continued to sign new contracts,” he said in a note, citing the company’s U.S. stock symbol.

“Now that hospital capacity constraints are easing in the U.S., we expect that PROF has started to work through its pandemic-driven installation backlog. And, all the while, we anticipate PROF has continued to sign new contracts that we also expect to be installed in the back half of 2021”

He says the market is starting to “appreciate PROF’s ability to catch up to the street’s estimates,” adding that “it’s only logical to assume a significant catch-up trade.”

Added Mr. Sarugaser: “Historically, it has taken [about] two weeks for positive news to properly move PROF’s stock price, so, despite its relatively low liquidity, we expect our clients will have a brief window during which they can capitalize on this opportunity.”

According to Refinitiv, the company’s largest shareholder is the asset management arm of the Business Development Bank of Canada, with a 6-per-cent stake, followed by Deerfield Management Co. Ltd and Fidelity International Ltd. each with about a 5-per-cent stake and Letko, Brosseau & Associates Inc. with a 4-per-cent stake.

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