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On Tuesday, Stifel analysts, led by David M. Grossman, adjusted the price target for DarioHealth Corp. (NASDAQ:DRIO) to $2.00 from the previous target of $3.50. Despite the reduction, they have upheld a Buy rating on the company’s shares. The adjustment follows the company’s fourth-quarter results, which displayed modest sequential revenue growth but met expectations. According to InvestingPro data, analyst price targets for DRIO currently range from $1 to $5, with the stock trading at $0.63, showing significant potential upside despite its high volatility characteristics.
The analysts noted that the known transitions in the customer base of Twill, which DarioHealth acquired in 2024, are expected to impact the first half of 2025’s sequential growth. This will likely lead to a year with more significant developments occurring towards the end. The company has signed 36 new B2B2B clients for 2025, and these contracts are anticipated to ramp up as the year progresses. With a current market capitalization of $24.44 million and maintaining a strong gross profit margin of 60.91%, InvestingPro analysis indicates the company’s valuation metrics suggest it may be undervalued relative to its growth potential.
DarioHealth is currently negotiating two substantial contracts: a behavioral health deal with a national health plan and a "full-suite" offering with another client. These deals are in advanced stages and are expected to start contributing to the company’s revenue in the second half of 2025. The company remains on track to achieve breakeven free cash flow (FCF) in the fourth quarter of 2025, thanks to a projected operating expense reduction of over 20% by the end of the year, while maintaining flat gross margins.
Stifel has revised its 2025 estimates for DarioHealth, now expecting 2025 revenues to be slightly above the fourth-quarter 2024 run-rate of $30.4 million, at $32 million. The firm predicts the company will reach FCF breakeven between the second half of 2026 and the first half of 2027, rather than the previously anticipated fourth quarter of 2025. However, they believe DarioHealth has enough cash on hand to approach this breakeven point.
Despite DarioHealth’s smaller size compared to many of its competitors, Stifel remains optimistic due to the company’s continued efforts to develop a comprehensive digital health solution. They highlighted that over 50% of new clients have subscribed to more than one condition, demonstrating DarioHealth’s growing penetration in the B2B market. For deeper insights into DRIO’s financial health and growth potential, including additional ProTips and comprehensive valuation metrics, investors can access the full company analysis through InvestingPro’s detailed research reports, available for over 1,400 US stocks.
In other recent news, DarioHealth Corp reported its fourth-quarter 2024 earnings, surpassing expectations with an EPS of -$0.08, significantly better than the forecast of -$0.2267. The company also exceeded revenue forecasts, reporting $7.6 million against the anticipated $7.51 million. This marks a 110% year-over-year revenue growth for the quarter, contributing to a total annual revenue of $27.03 million, a 32.9% increase from the previous year. DarioHealth has seen a notable increase in its B2B2C recurring revenue, which grew by 400% year-over-year. The company aims to achieve operational cash flow breakeven by the end of 2025.
In terms of strategic developments, DarioHealth has been expanding its market position through partnerships and product innovations. The company has also been focusing on the growth of its GLP-1 solutions, expecting them to at least double in 2025. Analysts from firms like TD Cowen have shown interest in DarioHealth’s GLP-1 support program, indicating potential market growth in this area. The company’s CEO, Erez Rafael, emphasized their strategic focus on profitability and the transformative role of AI in healthcare.
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