On Wednesday, BTIG maintained a positive stance on iCAD Inc . (NASDAQ:ICAD) stock, reiterating a Buy rating and a $3.00 price target for the company's shares.
iCAD's second-quarter performance exceeded market expectations. Revenues of $5.0 million exceeded the consensus estimate of $4.4 million.
The company's revenue gains were attributed to the launch of its Cloud platform, customer upgrades, and a strategic emphasis on large, national customers.
The firm achieved an impressive 84% gross margin and disclosed a 4% year-over-year increase in operating expenses. Despite these strong margins, iCAD reported an adjusted EBITDA of negative $1.2 million and a net loss of $1.6 million for the quarter.
The company observed a significant uptick in subscription orders, with 29 in the second quarter, marking a substantial increase from the 16 deals secured in the first quarter.
iCAD's subscription-based annual recurring revenue (S-ARR) saw growth, reaching $2.03 million at the end of the second quarter, up from $1.9 million at the end of the first quarter.
Additionally, the company sold 60 perpetual licenses and secured 10 deals for its ProFound Cloud SaaS platform during this period, which was the platform's first full quarter in the market. The total annual recurring revenue (T-ARR) for iCAD stood at $9.159 million, reflecting a 7% year-over-year increase.
The company reported having $20.4 million in cash and cash equivalents at the quarter's end, which was largely unchanged from the previous quarter's balance. The management team expressed confidence that the existing cash reserves are sufficient to support ongoing operations.
The report also mentioned that sales representatives added earlier in the year are now contributing to revenue, and increased productivity is expected in the second half of 2024.
In summary, BTIG views the quarterly update from iCAD as a positive development, reaffirming the Buy rating and a $3 price target based on a 3x enterprise value to sales valuation multiple on the firm's 12-24 month revenue estimate.
InvestingPro Insights
InvestingPro data offers a deeper dive into the financial health and performance of iCAD Inc. (NASDAQ:ICAD). The company holds a market capitalization of $35.84 million, which is a critical factor in understanding its size and market position. Despite the strong revenue growth reported in the last twelve months, with a 7.98% increase, iCAD's profitability remains a point of concern, as reflected in its negative P/E ratio of -15.17. This indicates that the company is not currently generating net earnings, which aligns with analyst expectations that iCAD will not be profitable this year.
On the operational front, iCAD's gross profit margin stands at an impressive 86.19%, showcasing the company's ability to maintain high margins. However, the adjusted operating income margin of -32.84% highlights the challenges in translating these gross margins into operational profitability. The company has also experienced significant stock price volatility, with a 13.33% return over the last week, yet a -45.6% return over the past year, signaling a highly fluctuating market sentiment.
InvestingPro Tips suggest that while iCAD holds more cash than debt, providing some financial flexibility, it is quickly burning through cash, which is a critical consideration for long-term sustainability. Moreover, with two analysts revising their earnings downwards for the upcoming period, investors should be aware of potential challenges ahead. For those seeking a more comprehensive analysis, InvestingPro offers additional tips and insights on iCAD Inc., which can be found at https://www.investing.com/pro/ICAD.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.