On Friday, TD Cowen sustained its positive stance on DarioHealth Corp. (NASDAQ: NASDAQ:DRIO), reiterating a Buy rating alongside a steady stock price target of $5.00. The firm's endorsement comes with an optimistic outlook on the company's future financial performance, particularly noting the expected benefits from the integration with Twill.
The analyst from TD Cowen highlighted the anticipated acceleration of cost synergies following DarioHealth's acquisition of Twill. This development, coupled with growing business-to-business-to-consumer (B2B2C) revenues, is projected to help the company reach its adjusted EBITDA break-even at the targeted $54 million total revenue run rate by the fourth quarter of 2025. This milestone is forecasted to be achieved three quarters earlier than previously estimated by the analyst before the acquisition.
The firm sees significant growth potential through the cross-selling opportunities between DarioHealth and Twill's client bases. The focus is particularly on the possibility of expanding relationships with large-scale companies, which could serve as a key driver for future growth.
DarioHealth's strategic moves, including the Twill acquisition, are aimed at enhancing its offerings and market reach. The company specializes in digital health solutions and is working towards establishing a more substantial presence in the B2B2C space.
The reiterated Buy rating and $5.00 stock price target reflect a steady confidence in DarioHealth's strategy and its potential to realize financial improvements and market expansion in the coming years.
In other recent news, DarioHealth Corp's earnings call highlighted an optimistic growth projection. The company's primary revenue driver, the B2B2C business channel, now represents 71% of pro forma revenues for Q1 2024 with high gross margins above 75%.
Significant revenue growth is expected in this sector for 2024 and 2025, propelled by new contracts and cross-selling opportunities, especially through the Twill acquisition. The B2C business also demonstrated profitability, generating $2 million in Q1 2024.
Partnerships with pharmaceutical companies like Sanofi (NASDAQ:SNY) in the strategic B2B channel are projected to reach an annual run rate of $6 million in 2024. DarioHealth anticipates reaching cash flow positivity by the second half of 2025, and a signed contract value of $60 million is expected by mid-next year.
These are recent developments, and the company plans to continue expanding its product offerings, leveraging the Twill acquisition. The launch of the first integrated product is anticipated in Q4 2024. DarioHealth is also aiming to add at least one national health plan this year, with more expansions planned for 2025.
InvestingPro Insights
As DarioHealth Corp. (NASDAQ: DRIO) garners a positive outlook from industry analysts, real-time data from InvestingPro provides additional context for investors considering the stock. With a market capitalization of $32.77 million, the company's valuation reflects the challenges it faces, including a negative Price to Earnings (P/E) ratio of -0.67 for the last twelve months as of Q1 2024. This indicates that investors are currently not expecting earnings from the company in the near term, aligning with analysts' anticipation that the company will not be profitable this year.
InvestingPro Tips suggest that DarioHealth's stock is in oversold territory, which could interest investors looking for potential rebound opportunities. Moreover, the company's liquid assets exceed its short-term obligations, providing some financial stability despite the stock's recent poor performance, with a price total return of -73.29% over the past year.
For those keen on exploring further, InvestingPro offers additional insights into DarioHealth's financial health and stock performance. There are more InvestingPro Tips available, which can be accessed through a subscription. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing a more comprehensive investment analysis tool.
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