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Why Butterfly Network Stock Flew Higher Today

By Evan Niu, CFA - Jun 21, 2021 at 12:31PM

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Cowen initiates coverage of the ultrasound-device maker with an outperform rating.

What happened

Shares of Butterfly Network (BFLY 28.70%) have flown higher today, up by 10% as of 12:40 p.m. EDT, after getting a bullish initiation from Wall Street. Cowen started  coverage of the healthcare company with an outperform rating (equivalent to a buy).

So what

Analyst Joshua Jennings assigned Butterfly Network an outperform rating alongside a price target of $20, representing approximately 43% upside from Friday's closing price. Butterfly Network sells its Butterfly iQ+, a handheld ultrasound device, that works with a mobile app. Healthcare providers pay a subscription fee to use the software platform.

Butterfly iQ+ next to a smartphone with an app showing an ultrasound

Butterfly iQ+ and the accompanying app. Image source: Butterfly Network.

"We believe [Butterfly Network] can transform healthcare delivery by successfully equipping healthcare providers and chronically ill patients with personal ultrasound devices," Jennings wrote in a research note to investors. "Democratizing access to advanced medical imaging should build clinical, societal, and shareholder value."

Now what

Jennings is forecasting strong adoption of Butterfly iQ and believes that recurring software-as-a-service (SaaS) revenue can grow at a compound annual growth rate (CAGR) of 60%. Jennings is the first major Wall Street analyst to cover Butterfly Network.

The company reported fiscal first-quarter results last month, which disappointed investors. Butterfly Network's guidance called for 2021 revenue in the range of $76 million to $80 million, which should result in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of negative $140 million to negative $160 million. Net loss for the year is expected to be $135 million to $155 million.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Butterfly Network, Inc. Stock Quote
Butterfly Network, Inc.
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