Neuronetics (STIM) shares shot up more than 28% on Monday after BTIG started covering the stock with a Buy rating and a $5 price target. The analyst sees the company entering a pivotal new phase, with the psilocybin opportunity taking center stage.

The story here is really about transformation. Neuronetics used to be a pure-play medical device company, best known for its NeuroStar system — a non-drug, noninvasive treatment for major depressive disorder (MDD). But the 2024 acquisition of Greenbrook TMS changed everything. That deal turned Neuronetics into a vertically integrated mental health platform, adding Transcranial Magnetic Stimulation (TMS) for mood regulation and Spravato, an FDA-cleared noninvasive therapy for MDD and other mental health conditions. So now the company has a much broader toolkit.

And that platform positions Neuronetics to benefit from what could be one of the most significant shifts in mental health treatment in a generation: psychedelic therapy.

Compass Pathways (CMPS) recently announced that its COMP360 psilocybin therapy for treatment-resistant depression hit the primary endpoint in both Phase 3 trials. The company plans to file its FDA application in the fourth quarter of 2026, and if approved, expects a commercial launch in the first half of 2027. Neuronetics already has a collaboration agreement with Compass, and it has shown it can integrate and deliver novel interventional therapies through its Spravato (esketamine) program. So if psilocybin gets the green light, Neuronetics is well positioned to help bring it to patients.

BTIG analyst Sam Eiber initiated coverage with a Buy rating and a $5 price target, which is based on 2.5 times the firm's estimated sales over the next 12 to 24 months. The valuation reflects the company's market-leading TMS franchise and its position in the emerging psychedelic therapy market. Eiber acknowledges that execution and reimbursement risks remain, but sees an attractive risk/reward at current levels.

The financials back up some of that optimism. Neuronetics reported a first-quarter loss of 16 cents per share, beating the consensus estimate of a 17-cent loss. Sales came in at $34.454 million, topping the consensus of $34.183 million. The growth was driven by the Greenbrook acquisition and continued expansion of the Spravato program.

In May, Neuronetics also partnered with ANT Neuro to expand the NeuroStar Advanced Therapy System, adding advanced image-guided navigation technology to improve the platform's capabilities. That's another piece of the puzzle that makes the company more than just a device maker.

As of Monday's publication, Neuronetics shares were trading at $2.08, up 28.40% on the day. The stock still has a long way to go to hit that $5 target, but the market is clearly betting that the psilocybin opportunity is real — and that Neuronetics is in the right place at the right time.