Shares of Butterfly Network Inc. (BFLY) soared 5.7% on receiving its first Buy rating from Wall Street firm Cowen & Co. after it initiated coverage for the innovative digital health company. Shares closed at $14.75 on June 21.
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Butterfly created the world’s first handheld, single probe whole-body ultrasound system using its patented Ultrasound-on-Chip™ technology, named Butterfly iQ. The company has two revenue streams: one from sales of products such as medical devices, accessories and the other from subscription revenue, which is a fee paid by healthcare providers for using its software platform. (See Butterfly stock chart on TipRanks)
The company has given upbeat guidance for the Fiscal year 2021 after reporting solid Q1 results in May. The company forecasts FY21 revenue to fall in the range of $76-$80 million, indicating year-over-year growth of 64%-73%
Analyst’s View
Cowen & Co. analyst Josh Jennings initiated coverage of Butterfly Network with a Buy rating and assigned a price target of $20, which implies 35.6% upside potential from current levels.
Jennings said in a note to investors, “We believe BFLY can transform health care delivery by successfully equipping health care providers and chronically ill patients with personal ultrasound devices. Democratizing access to advanced medical imaging should build clinical, societal, and shareholder value.”
The analyst projects a revenue CAGR of more than 60% for the company, backed by strong demand for the Butterfly iQ technology and recurring Software-as-a-Service (SaaS) revenue.
According to TipRanks’ Smart Score system, Butterfly gets a 6 out of 10, which indicates that the stock is likely to perform in line with market averages.
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