On Friday, an analyst at Cantor Fitzgerald adjusted the stock price target for Lucid (NASDAQ:LCID) Diagnostics Inc (NASDAQ:LUCD), reducing it to $2.00 from the previous $3.00, while continuing to recommend the stock with an Overweight rating. The revision reflects challenges the company faces in obtaining broader reimbursement for its services.
The analyst explained the rationale behind the lowered price target, emphasizing the company's ongoing efforts to secure broader reimbursement. Despite the reduction in the target price, the analyst utilized a combination of discounted cash flow (DCF) analysis and an enterprise value to calendar year 2025 estimated revenue (EV/CY25E) multiple to arrive at the new figure.
The EV/CY25E revenue multiple applied was 6.0x, an increase from the previous 3.0x, indicating a premium compared to Lucid Diagnostics' peers.
The premium is considered justified by the firm based on Lucid's superior growth rate and its novel product offering in the market. The DCF analysis included in the valuation approach was probability-adjusted with a 75% chance of success and a 15% discount rate. The forecast within the DCF extends up to the year 2030, at which point a terminal value is calculated using a perpetual growth rate of 4%, consistent with the prior analysis.
To determine the equity value, Cantor Fitzgerald accounted for the company's net debt, estimating a total equity value of approximately $116 million, which translates to roughly $2.07 per share. This figure, when averaged with the share price implied by the peer revenue multiple of $1.67, culminates in the new $2.00 price target. The analyst's detailed approach underlines both the methodical valuation process and the factors influencing the target adjustment for Lucid Diagnostics.
In other recent news, Lucid Diagnostics has reported a substantial increase in revenue and test volumes. The company announced a 20% sequential revenue growth to $1.2 million during its Third Quarter 2024 Business Update Conference Call, with 2,787 tests conducted.
Lucid Diagnostics is actively expanding its commercial initiatives and preparing for Medicare coverage determination for its EsoGuard test, which has a total addressable market estimated at $60 billion.
The company's strategic focus on expanding its commercial initiatives has resulted in a significant increase in revenue and test volume. Lucid Diagnostics is entering the concierge medicine market and is leveraging its technology for wellness screenings, indicating a diversification of its business model.
The company's future financial stability will largely depend on revenue growth linked to improving reimbursement landscapes and direct contracting with self-insured employers.
Lucid Diagnostics plans to submit data for Medicare coverage shortly, with a decision expected in the first half of 2024. The company's geographical strength in states like California, Texas, and Florida, combined with a focus on areas with biomarker legislation, positions it well for future growth. These are among the recent developments for Lucid Diagnostics, which remains optimistic about its upcoming developments.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Lucid Diagnostics' financial position and market performance. The company's market capitalization stands at $54.53 million, reflecting its current valuation in the market. Despite the challenges highlighted in the analyst report, Lucid has shown impressive revenue growth, with a 179.27% increase over the last twelve months as of Q3 2024. This aligns with one of the InvestingPro Tips, which notes that analysts anticipate sales growth in the current year.
However, the company's financial health presents some concerns. An InvestingPro Tip indicates that Lucid is quickly burning through cash, which is corroborated by the negative operating income of -$45.13 million over the last twelve months. Moreover, the company suffers from weak gross profit margins, with a margin of -53.07% in the same period.
On a more positive note, Lucid has demonstrated strong short-term market performance, with InvestingPro data showing a 27.85% price return over the last month and a 20.96% return over the last three months. This recent momentum could be a factor for investors to consider alongside the analyst's Overweight rating.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for Lucid Diagnostics, providing a deeper understanding of the company's financial situation and market position.
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