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On Wednesday, Stifel analysts revised their outlook on DarioHealth Corp. (NASDAQ: NASDAQ:DRIO), currently trading at $0.66 with a market capitalization of $27.43 million, reducing the price target from $2.00 to $1.50 but retaining a Buy rating on the stock. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics. The revision follows the company’s first-quarter performance, which fell short of expectations due to a transition in its dealings with a large national health plan and minor delays caused by tariffs affecting its partner channel.
Analysts noted that while they have lowered their revenue estimate for 2025 to account for these issues, they anticipate a ramp-up in significant contract awards from the second half of 2025 into 2026. Despite the current challenges, management at DarioHealth is aiming to reach free cash flow (FCF) breakeven by the first quarter of 2026. Stifel’s projections are slightly more conservative, expecting the breakeven point to occur in the second half of 2026 or the first half of 2027.
The company is believed to have adequate cash and borrowing capacity to sustain operations until it reaches the breakeven point, supported by a healthy current ratio of 2.44. Stifel’s stance reflects a positive outlook on the company’s ability to reduce expenses and secure new customer relationships, which could bolster growth despite some ongoing uncertainties in the near term. For deeper insights into DarioHealth’s financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis and additional ProTips.
DarioHealth’s strategy and financial targets signal a commitment to achieving profitability, supported by management’s efforts to streamline costs and expand their customer base. The stock’s price target adjustment by Stifel reflects these factors and the firm’s confidence in the company’s potential for recovery and growth in the coming years.
In other recent news, DarioHealth Corp announced its first-quarter 2025 financial results, revealing an earnings per share (EPS) of $0.14, which significantly surpassed the forecasted loss of $0.10. However, the company’s revenue of $6.75 million fell short of the anticipated $7.47 million, marking a notable miss in projections. Despite the revenue shortfall, DarioHealth reported a 17% year-over-year increase in revenue and maintained strong gross margins of 81% in its core business. The company also highlighted operational improvements, including a 36% reduction in non-GAAP operating loss and a 35% decline in operating expenses year-over-year. On the strategic front, DarioHealth successfully integrated its Twilio (NYSE:TWLO) acquisition, expanding its platform to support five chronic conditions. The company is targeting operational cash flow breakeven by December 2025 or January 2026, with an expected annual run rate of $40-45 million. Additionally, DarioHealth anticipates increased revenue contributions from its pharma channel and expanded uptake of its GLP-one and cardiometabolic bundles. Analyst firms such as TD Securities and Stifel have been actively engaging with the company, as seen in the recent earnings call.
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