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On Thursday, BTIG analyst Marie Thibault increased the price target on Delcath Systems (NASDAQ:DCTH) to $22.00 from $20.00, while reiterating a Buy rating on the stock. The company’s stock has shown remarkable strength, delivering a 244% return over the past year according to InvestingPro data. Thibault praised the company for what she described as one of the most impressive product launches in recent years. Delcath’s Hepzato generated $32.3 million in revenue in its first year, with fourth-quarter revenue hitting $15.1 million, matching preannounced figures and surpassing consensus estimates of $12.5 million.
Delcath’s fourth-quarter earnings were bolstered by Hepzato’s $13.7 million in sales and Chemosat’s $1.4 million. The company has continued to expand in the United States, with two new centers activated in the first quarter, bringing the total to 16, and eight additional centers now accepting referrals. Delcath’s presence in Europe has also seen steady growth. InvestingPro analysis shows the company maintains a moderate debt level with a healthy current ratio of 1.34, supporting its expansion strategy.
The company’s gross margins reached 86%, exceeding the guidance of 80-85% and consensus estimates of 81%. Additionally, Delcath reported a positive adjusted EBITDA of $4.6 million. The company’s operating cash burn for the fourth quarter was $1 million, and it concluded the year with $53.2 million in cash and short-term investments, with no outstanding debt obligations.
Looking forward, Thibault expressed confidence in Delcath’s growth prospects for 2025, considering the consensus revenue estimate of $76.6 million achievable. The company is actively broadening its commercial reach both domestically and internationally, with several pipeline initiatives on the horizon. Furthermore, Hepzato’s average selling price has experienced a slight increase, while the average treatments per center and the number of treatment cycles per patient have remained stable.
Management anticipates maintaining strong gross margins in 2025, has reiterated its outlook for operating expenses, and expects to be cash flow positive in 2025. Thibault’s optimism about Delcath’s early performance, commercial execution, and pipeline progress is reflected in the revised price target, which is based on a roughly 6x enterprise value/sales multiple applied to BTIG’s 2027 sales forecast. This valuation uses an annual discount rate of 10% and a fully diluted share count.
In other recent news, Delcath Systems reported a mixed financial performance for the fourth quarter of 2024. The company achieved a revenue of $15.1 million, exceeding the forecast of $13.62 million, but reported an earnings per share (EPS) of -$0.11, missing the forecast of $0. Notably, Delcath Systems recorded its first positive adjusted EBITDA of $4.6 million. The company’s strong revenue growth was attributed to the U.S. launch of its Hepsato product and increased activity in European markets. Delcath plans to expand its active treatment centers to 30 by the end of the year and expects R&D expenses between $35 million and $40 million for 2025. Analysts from Canaccord Genuity and BTIG have taken note of the company’s strategic expansion efforts. The company also announced plans for further international expansion and additional indications for its products.
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