On Friday, Benchmark adjusted its outlook for Cardio Diagnostics Holdings, Inc. (NASDAQ:CDIO), reducing the stock price target to $1.35 from the previous $4.00, while maintaining a Speculative Buy rating. The revision reflects an extended launch trajectory for the company's revenue estimates, with a breakeven point now forecasted for 2028.
Cardio Diagnostics concluded the fourth quarter of 2023 with $1.3 million in cash reserves and raised an additional $1.9 million in new capital during the first quarter of 2024. On the commercial front, the company secured Current Procedural Terminology (CPT) codes from the American Medical Association (AMA) in December 2023.
In November 2023, the Journal of the American Heart Association (JAHA) published results from a validation study of the company's PrecisionCHD test, indicating its potential as a clinically meaningful assessment and monitoring tool for coronary heart disease (CHD).
The study is expected to be part of the documentation submitted to MolDx for CMS reimbursement approval, although the timing for this approval remains uncertain. As a result, Cardio Diagnostics is anticipated to explore alternative revenue streams, including concierge health services, employer partnerships, and out-of-network commercial business, at least for the upcoming year.
Benchmark's analyst noted that the company is currently experiencing a quarterly cash burn rate of approximately $1.5 million, suggesting the need for additional capital in the near future. Despite these challenges, Cardio Diagnostics estimates the market potential for an effective CHD risk assessment tool at $8.5 billion.
The new stock price target of $1.35 per share is based on 7 times the firm's 2028 revenue projection of $27 million, discounted back to the end of 2024 at a rate of 20%. The firm also acknowledges the possibility of a more rapid revenue increase than currently anticipated.
InvestingPro Insights
In light of Benchmark's revised outlook for Cardio Diagnostics Holdings, Inc. (NASDAQ:CDIO), it's pertinent to consider real-time data and insights from InvestingPro. The company's market capitalization stands at a modest $23.53 million, reflecting its position as a niche player in the healthcare diagnostics industry.
Despite a staggering revenue growth of over 1696% in the last twelve months as of Q1 2023, analysts are not expecting the company to be profitable this year, which is underscored by the negative price-to-earnings (P/E) ratios both on a standard and adjusted basis.
InvestingPro Tips suggest that while the company is quickly burning through cash with a high quarterly cash burn rate, it has liquid assets that exceed its short-term obligations, providing some financial cushioning.
Still, the stock price has experienced significant volatility, with a substantial 50.9% drop over the last three months, yet also showing a large 282.46% uptick over the past six months. This volatility is something that potential investors should be mindful of.
For those considering an investment in Cardio Diagnostics, it may be beneficial to explore the additional 12 InvestingPro Tips available at https://www.investing.com/pro/CDIO. To enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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