TransMedics shares drop after Q1 margin pressure despite 21% revenue growth

TransMedics reported a 21% revenue increase to $173.9 million in Q1 2026, but its gross margin fell to 58.2%, causing adjusted EPS to drop to $0.30. This margin pressure led to a sell-off in its shares, although the company’s core growth potential remains strong due to its unique integrated transplantation network. The company is seen as having a competitive moat that supports long-term dominance. If margins recover, the stock is attractively valued at 16–21 times projected 2027–2028 earnings, with a potential price target between $85 and $107 if execution improves.