On Thursday, Chardan Capital Markets adjusted its outlook on Allurion Technologies (NYSE:ALUR), reducing the price target to $2.50 from the previous $5.00 but maintaining a Buy rating on the stock. The firm's move comes after Allurion announced its second-quarter financial results for 2024 and updated its business status, revealing both progress and challenges.
Allurion reported a revenue of $11.8 million for the second quarter, marking a $2.4 million increase from the first quarter, which translates to a 25% sequential growth. However, the company is confronting various obstacles, including macroeconomic headwinds, particularly in Latin America and Asia Pacific regions, and issues related to inventory levels.
Adding to the company's challenges, on August 7, 2024, Allurion disclosed in an 8K filing that the French regulatory authority, Agence Nationale de Sécurité du Médicament (ANSM), has halted the sales of the Allurion Balloon in France. The suspension is due to the need for a remediation plan addressing risks linked to the product's advertising, follow-up program, and adverse events. France represents a significant market for Allurion, with sales in the country accounting for 10% of total product sales in 2023 and around 16% in the first half of 2024.
In light of these issues, Allurion's management has revised its full-year 2024 revenue guidance downward to $40 to $45 million from the previously projected range of $60 to $65 million. Despite the setbacks and lowered revenue expectations, Chardan Capital Markets retains a positive outlook on the company, expressing hope that the AUDACITY pivotal study results will be favorable. The firm's analyst cited this anticipation as the rationale for continuing to recommend a Buy rating, albeit with a reduced price target.
In other recent news, Allurion Technologies reported a significant uptick in its second-quarter revenue, marking a 25% rise to $11.8 million. This comes despite regulatory challenges in France and macroeconomic headwinds in Latin America and Asia Pacific. The company is optimistic about achieving profitability by 2025. In addition, Allurion welcomed Ojas A. Buch as the new Chief Operating Officer and is advancing its digital offerings, including an AI-powered weight loss coach and a virtual care suite.
Allurion is currently facing a potential delisting from the New York Stock Exchange due to non-compliance with the exchange's minimum share price requirement. The company, however, plans to address this issue within the allotted six-month cure period. Possible strategies being considered include a reverse stock split, pending shareholder approval.
InvestingPro Insights
As Allurion Technologies (NYSE:ALUR) navigates through its current financial and regulatory challenges, insights from InvestingPro could provide investors with additional context on the company's position. According to InvestingPro Data, Allurion has a market capitalization of $43.27 million and a notable gross profit margin of 76.19% for the last twelve months as of Q2 2024. Despite this strong margin, the company has experienced a significant revenue decline of 23.59% over the same period. This is in line with the company's recent announcement of lowered revenue guidance for the full year.
InvestingPro Tips highlight that Allurion operates with a significant debt burden and may have trouble making interest payments on its debt, which could be a concern for potential investors. Additionally, the stock is currently trading near its 52-week low, and analysts do not anticipate the company will be profitable this year. For those looking to dive deeper into Allurion's financial health and future prospects, there are 19 additional InvestingPro Tips available at https://www.investing.com/pro/ALUR.
These insights underscore the importance of monitoring Allurion's ability to manage its debt and return to profitability, especially given the recent regulatory setbacks in France and the overall sales decline. With the stock price having fallen significantly over the past year, investors may want to consider these factors alongside the company's high gross profit margins when making investment decisions.
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