On Tuesday, BTIG updated its outlook on shares of Delcath Systems (NASDAQ:DCTH), increasing the price target to $20.00 from the previous $16.00 while maintaining a Buy rating on the stock. The firm recognized the company's faster-than-expected U.S. commercial launch, noting significant second-quarter sales that surpassed consensus estimates.
Delcath Systems reported total second-quarter sales of $7.8 million, including $6.6 million from its Hepzato kit and $1.2 million from overseas Chemosat sales. This figure notably exceeded the consensus projection of $5.2 million.
During the quarter, seven treatment centers were operational, estimated to have performed 36 treatments combined. An additional center began treatments in July, with expectations to have 10 centers by the end of August and 12 by the end of the third quarter.
The company is progressing in line with its launch schedule, treating more patients and generating more revenue than initially anticipated. Delcath Systems aims to activate 20 U.S. centers by year-end or shortly thereafter. The introduction of a permanent and product-specific J-code for Hepzato on April 1 has facilitated the hospital claims process, contributing to the company's strong performance.
Management has reaffirmed its target of approximately $10 million in quarterly U.S. revenue by the fourth quarter of 2024. Achieving this milestone is expected to unlock a $25 million funding tranche, which, according to the company, should enable it to reach cash flow breakeven at the current research and development spending levels.
Delcath Systems also reported a gross margin of 80.4%, which was 560 basis points higher than what analysts had modeled. Moreover, operating expenses were $2.6 million lower than anticipated, despite the increase in revenue, marking a positive development for the company.
The robust financial performance has led BTIG to revise its third-quarter U.S. revenue estimate upwards and to adopt a more optimistic valuation multiple, increasing from 5.5x to approximately 6x, applied to the 2027 sales forecast. After discounting back at 15% with a fully diluted share count, the revised price target stands at $20, reaffirming the Buy rating.
In other recent news, Delcath Systems, a prominent interventional oncology company, has reported significant developments. The company has announced the appointment of Dr. Bridget Martell to its Board of Directors. Dr. Martell, who possesses extensive experience in the biotechnology sector and oncology clinical development, is expected to be a valuable asset to Delcath.
Delcath Systems also reported strong Q1 earnings, with revenue of $3.1 million and a net loss of $0.45 per share, surpassing consensus estimates. Following this, H.C. Wainwright reaffirmed its Buy rating for the company and raised its price target from $20.00 to $22.00, indicating confidence in Delcath's performance and future prospects.
In addition, during a recent earnings call, Delcath Systems revealed its target of achieving $10 million in US quarterly revenue by the end of 2024. The company reported Q1 2024 revenue of $2 million from HEPZATO sales and $1.1 million from CHEMOSAT sales in the US. Delcath's current financial resources, standing at $27.2 million in cash investments at the end of Q1, are expected to sustain operations until the revenue goal is met.
These developments underline Delcath's ongoing growth and its strategic focus on expanding its treatment centers and increasing patient treatment rates.
InvestingPro Insights
As Delcath Systems (NASDAQ:DCTH) garners attention with its updated outlook and robust financial performance, real-time data from InvestingPro offers additional insights into the company's market position. With a market capitalization of $231.18 million and a striking revenue growth of 56.81% over the last twelve months as of Q1 2024, Delcath's financial trajectory appears promising. The company's revenue growth is further highlighted by a quarterly surge of 425.8% in Q1 2024, showcasing a significant increase in sales.
InvestingPro Tips underscore that Delcath holds more cash than debt, a reassuring sign for investors concerned about the company's financial stability. Additionally, analysts anticipate sales growth in the current year, aligning with the company's own targets. However, they also note that Delcath is quickly burning through cash and do not expect it to be profitable this year. These insights suggest a company in a transformative phase, aggressively investing in growth while navigating the challenges of reaching profitability.
For investors looking to delve deeper into Delcath Systems' potential, there are 13 additional InvestingPro Tips available at https://www.investing.com/pro/DCTH. These tips provide a comprehensive analysis that could guide investment decisions, including perspectives on the company's valuation multiples and stock performance over various time frames.
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