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Investing.com - Morgan Stanley has initiated coverage on Heartflow Inc (NASDAQ:HTFL) with an Equalweight rating and a price target of $35.00. The company, currently valued at $2.64 billion, shows strong financial health according to InvestingPro data, with a robust current ratio of 3.33.
The investment bank’s analysis indicates Heartflow shares are trading at a mid-teens EV/2026 estimated sales multiple, which Morgan Stanley considers expensive even compared to other high-growth, high-margin medical technology and diagnostics companies. This assessment aligns with InvestingPro data showing impressive gross margins of 75.62%, though the stock appears overvalued based on Fair Value calculations.
Morgan Stanley justifies its $35 price target, which represents approximately 13.5x EV/2026 Base Case sales, by citing Heartflow’s 25%+ forward revenue compound annual growth rate, higher starting gross margin, lower execution risk compared to hardware medical technology companies, and greater potential for rapid scaling.
The price target is further supported by a 10-year discounted cash flow analysis that assumes decelerating but still double-digit revenue growth through 2035, driven by traction in asymptomatic applications and EBIT margins approaching the mid to high-30s, similar to other mature software-focused companies.
Despite the Equalweight rating, Morgan Stanley believes the risk for Heartflow shares "skews to the upside" when considering the full range of potential outcomes for the company. InvestingPro analysis indicates the stock is currently in overbought territory, with several additional insights available to subscribers.
In other recent news, Heartflow Inc has completed its initial public offering, raising approximately $364.2 million. The company issued 19,166,667 shares of common stock at $19 per share, including an additional 2,500,000 shares after underwriters fully exercised their option. This significant capital raise comes as several investment firms initiate coverage on Heartflow, reflecting strong interest in its AI technology for coronary artery disease. Canaccord Genuity started coverage with a Buy rating and a $35 price target, highlighting the transformative potential of Heartflow’s AI-based products in coronary artery disease detection. Similarly, Piper Sandler initiated an Overweight rating with a $38 price target, emphasizing the company’s role in AI-powered medical technology. JPMorgan also began coverage with an Overweight rating and a $36 price target, citing Heartflow as a key player in the AI revolution within healthcare. Stifel joined with a Buy rating and a $35 price target, based on their 2026 revenue projections for the company. These developments underscore the growing confidence in Heartflow’s innovative approach to healthcare technology.
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