On Thursday, Benchmark raised its price target for Cardio Diagnostics Holdings, Inc. (NASDAQ: CDIO) shares to $2.00 from the previous $1.35, while maintaining a Speculative Buy rating on the stock. The revision reflects the firm's positive outlook on the company's market prospects in coronary heart disease risk assessment.
Cardio Diagnostics concluded the first quarter of 2024 with a cash balance of $1.6 million and a cash burn of $1.2 million, indicating a financial runway of approximately one quarter without additional funding.
Despite financial constraints, the company is optimistic about the sizable market opportunity for its coronary heart disease (CHD) risk assessment tools, which it estimates at $8.5 billion.
The company has made significant strides in the commercialization of its CHD tests. In December 2023, Cardio Diagnostics secured CPT PLA codes from the American Medical Association (AMA), which is a critical step in the billing process for laboratory tests. Efforts to gather clinical evidence to support formal reimbursement for their CHD tests are ongoing.
Looking ahead, Cardio Diagnostics is preparing for a pre-submission meeting with MolDx scheduled for the third quarter of 2024 to discuss coverage options for its Epi+Gen CHD and PrecisionCHD tests.
Benchmark's updated price target of $2 per share is based on a threefold multiple of the company's projected 2028 revenue of $27 million, discounted to the end of 2024 at a risk-adjusted rate of 20%. This valuation multiple is in line with the average of comparable companies in the sector.
The firm indicated that there is potential for the stock to outperform its estimates if Cardio Diagnostics can accelerate its revenue growth more rapidly than currently projected.
The company's progress in securing codes and building clinical evidence is seen as a positive indicator for its future revenue potential.
In other recent news, Cardio Diagnostics' study reveals potential cost savings associated with its PrecisionCHD™ test. Published in Advances in Therapy, the study suggests that the AI-powered multiomic DNA test could save a health plan with one million members up to $113.6 million annually.
The PrecisionCHD™ test, which analyzes a combination of epigenetic and genetic biomarkers, may lead to significant cost reductions due to its lower cost and less need for follow-up testing.
Furthermore, Cardio Diagnostics concluded the fourth quarter of 2023 with $1.3 million in cash reserves and raised an additional $1.9 million in new capital during the first quarter of 2024.
However, Benchmark recently adjusted its outlook for the company, reducing the stock price target to $1.35 from the previous $4.00, while maintaining a Speculative Buy rating.
The revision reflects an extended launch trajectory for the company's revenue estimates, with a breakeven point now forecasted for 2028.
These are among the recent developments for Cardio Diagnostics. The American Medical Association has awarded PrecisionCHD™ a Current Procedural Terminology code, effective April 1, 2024, and it has also received an Innovation Technology contract from Vizient. Despite the challenges, Cardio Diagnostics estimates the market potential for an effective CHD risk assessment tool at $8.5 billion.
InvestingPro Insights
Benchmark's recent price target increase for Cardio Diagnostics Holdings, Inc. (NASDAQ: CDIO) is a nod to the company's potential in the coronary heart disease risk assessment market. The InvestingPro data underscores this potential with a staggering revenue growth of 3372.95% in the last twelve months as of Q1 2024. Despite the company's rapid sales growth, analysts highlighted by InvestingPro Tips suggest that CDIO is not expected to be profitable this year and is quickly burning through cash, which is consistent with the cash balance and burn rate mentioned in the article. Furthermore, the company's stock price has experienced a significant decline over the past three months, with a 56.43% drop.
InvestingPro Tips also reveal that Cardio Diagnostics operates with a moderate level of debt and has liquid assets that exceed short-term obligations, which provides some financial stability. However, the company is trading at a high revenue valuation multiple, which indicates that investors have high expectations for future growth. For readers looking to delve deeper into Cardio Diagnostics' financial health and market position, additional InvestingPro Tips are available. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking valuable insights into the company's performance and industry standing.
Lastly, the InvestingPro Fair Value estimate of $1.08 USD is significantly below Benchmark's target, suggesting that investors should exercise caution and consider the full range of analyst expectations and the company's financial metrics before making investment decisions.
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