On Friday, Canaccord Genuity adjusted its stock price target for iRhythm Technologies (NASDAQ:IRTC), a digital healthcare company, to $122.00 from the previous $133.00. Despite this change, the firm maintains a Buy rating on the stock.
This revision follows iRhythm's first-quarter financial report, which showcased a revenue increase of 18.4% year-over-year, reaching $131.9 million. The reported revenue surpassed both Canaccord Genuity's estimate of $127.6 million and the consensus estimate of $128.4 million.
The company's adjusted earnings per share (EPS) for the first quarter was reported at ($1.23), which was below the estimates of both Canaccord Genuity and the consensus, which stood at ($1.04) and ($0.97), respectively. The shortfall in EPS was attributed to operating expenses exceeding the forecasts for the quarter.
iRhythm's management has decided to maintain its forward guidance, with slight adjustments in revenue projections to account for the first-quarter performance. The updated forecast for the fiscal year 2024 estimates revenues to be in the range of $578 million to $588 million. The guidance for margins remains unchanged.
The company is continuing its efforts to address the warning letter it received, and it is seeing ongoing growth in the primary care physician (PCP) channel. Moreover, iRhythm is expanding its operations outside the United States, launching the "Know Your Rhythm" campaign, and conducting a pilot for sleep apnea detection.
Notably, iRhythm's Zio service has become one of the default options for users on the Epic Aura platform. It is also worth mentioning that the current sleep apnea pilot does not utilize the company's patch technology but instead relies on its service offerings.
Canaccord Genuity's revised price target reflects lower comparative group multiples and a reduction in net cash positions, as explained by the firm. Despite these adjustments, the Buy rating indicates a continued positive outlook on iRhythm Technologies' stock.
InvestingPro Insights
With iRhythm Technologies' (NASDAQ:IRTC) recent financial performance in mind, InvestingPro data highlights several key metrics that investors should consider. The company's market capitalization stands at $3.45 billion, and while it has experienced a revenue growth of 19.35% over the last twelve months as of Q1 2024, it is trading at a high Price / Book multiple of 16.42.
This could indicate that the stock is potentially overvalued relative to its book value. Moreover, the company's gross profit margin is strong at 66.96%, reflecting its ability to retain a significant percentage of sales as gross profit.
Yet, iRhythm Technologies is currently not profitable, with a negative operating income margin of -19.94% and a P/E ratio of -27.39, which further adjusted to -32.34 over the last twelve months as of Q1 2024. The negative earnings per share (EPS) of -4.23 USD also underscores the company's current lack of profitability.
From an investment standpoint, one of the InvestingPro Tips for iRhythm Technologies is that analysts do not anticipate the company will be profitable this year, which aligns with the reported data. Moreover, liquid assets exceed short term obligations, indicating the company has a buffer to manage its short-term liabilities.
For investors looking for a more in-depth analysis, there are additional InvestingPro Tips available, which can be accessed by visiting the InvestingPro platform for iRhythm Technologies. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 7 more InvestingPro Tips to explore that could provide further insights into the company's financial health and stock performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.