On Wednesday, Heart Test Laboratories Inc. (NASDAQ:HSCS) saw its price target significantly reduced by Maxim Group from the previous $35.00 to $12.00. Despite the reduction, the firm has maintained its Buy rating on the company's stock.
This adjustment follows the fiscal year 2024 results reported by Heart Test Laboratories after the market closed on Sunday, which revealed lower than expected expenses and a consequently narrower adjusted EBITDA loss.
The company, which is still in the pre-revenue stage, reported key developments including progress on the FDA submission process for its MyoVista device and AI-ECG algorithm. The submissions for these products are expected in the first quarter of 2025 and mid-calendar year 2025, respectively.
fHeart Test Laboratories is also transitioning towards software-based solutions and has established a partnership with Mount Sinai, secured international agreements, and taken steps to strengthen its patent portfolio.
Despite these advancements, the timeline for FDA submissions has been extended beyond initial expectations. Consequently, Maxim Group has adjusted its forecast, pushing the projection for initial revenue generation to fiscal year 2026, a year later than previously anticipated. Adjusted EBITDA profitability is now expected in fiscal year 2028, a two-year delay from the original estimate.
As of the end of April 2024, Heart Test Laboratories reported holding $5.8 million in cash. The company's cash reserves are projected to be sufficient until October 2024.
However, with access to an equity line and at-the-market (ATM) offerings, funding is anticipated to be secured through July 2025.
The revised price target of $12.00 is based on a 10-year discounted cash flow (DCF) analysis, taking into account the recent 1:100 reverse stock split enacted on May 17, 2024.
InvestingPro Insights
Heart Test Laboratories Inc. (NASDAQ:HSCS) has recently been under scrutiny following its fiscal year 2024 results and subsequent adjustments in price targets by analysts. With a current market capitalization of just $2.51 million, the company's financial health and future prospects are of paramount interest to investors. According to InvestingPro data, the company has experienced a staggering revenue growth of 261.17% as of the last twelve months leading to Q4 2024, which is a positive sign for the company's potential to scale once its products reach the market.
However, the company's stock performance tells a different story, with a price that has plummeted by over 95% in the last year. This aligns with the InvestingPro Tip that the stock has fared poorly over the last month and has taken a significant hit over the last six months. These metrics suggest volatility and investor caution. On the brighter side, another InvestingPro Tip points out that Heart Test Laboratories holds more cash than debt on its balance sheet, which provides some financial stability in the short term.
Investors considering Heart Test Laboratories should note that analysts do not anticipate the company will be profitable this year, and the company is quickly burning through cash. However, the company's liquid assets exceed its short-term obligations, which could be a cushion against immediate financial pressures. For those seeking in-depth analysis, additional InvestingPro Tips are available, offering a comprehensive view of Heart Test Laboratories' financial health and market position. To access these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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