On Wednesday, B.Riley resumed coverage on Augmedix Inc. (NASDAQ:AUGX), issuing a Buy rating and setting a price target of $5.50. The firm highlighted Augmedix as a distinct entity in the public market, focusing on medical documentation services for clinicians, especially in the wake of Nuance Communications (NASDAQ:NUAN)' $20 billion acquisition by Microsoft (NASDAQ:MSFT).
Augmedix's partnership with Google (NASDAQ:GOOGL) and HCA Healthcare (NYSE:HCA) has been instrumental in integrating its services into physicians' daily patient interactions, streamlining documentation processes and boosting revenue. The analyst from B.Riley pointed out that the current shift towards Web 3.0 suggests a move from generic keyword searches to more personalized, nuanced responses. Augmedix is positioned to become a key portal for physicians seeking medical references, services, and treatments.
The company reported a revenue of $44.9 million in 2023, marking a compound annual growth rate (CAGR) of 40% since 2020. Augmedix has also provided guidance for 2024 revenue, projecting between $60 million and $62 million, which would represent a 36% increase at the midpoint. In November 2023, Augmedix raised $26 million aimed at prioritizing the commercial expansion of Augmedix Go and other existing products, with the goal of achieving cash flow breakeven by the end of 2025.
Despite Augmedix's stock being down 32% year-to-date, B.Riley views this as an opportunity for investors, especially in comparison to the Digital Health ETF (EDOC), which is down only 7%. The selling pressure, attributed to large shareholder DCM exiting its initial venture investment, has resulted in what B.Riley considers a discounted trading price for Augmedix relative to its private-held peers.
The price target of $5.50 is based on a forward enterprise value to sales (EV/S) multiple of 4.4x, which takes into account Augmedix's growth rate that outpaces the average healthcare information technology (HCIT) company.
InvestingPro Insights
Augmedix Inc. (NASDAQ:AUGX) has been navigating a challenging market, but there are several key financial metrics and expert insights from InvestingPro that investors should consider. With a market capitalization of $195.93 million, Augmedix is a notable player in the medical documentation field. Despite not paying dividends, the company holds a substantial amount of cash over debt, which may provide a cushion in volatile market conditions. Additionally, the strong revenue growth of 45.01% in the last twelve months as of Q4 2023, along with a gross profit margin of nearly 48%, underscores the company's ability to generate income from its sales.
InvestingPro Tips highlight that Augmedix's stock price often moves counter to market trends, which could offer diversification benefits to a portfolio. However, the company is not expected to be profitable this year, and net income is anticipated to decline. The high Price / Book multiple of 8.4 suggests a premium valuation relative to the company's book value. With liquid assets surpassing short-term obligations, Augmedix appears to maintain a solid liquidity position.
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