On Wednesday, Canaccord Genuity maintained a positive stance on Delcath Systems (NASDAQ:DCTH), reiterating a Buy rating and a $21.00 price target for the company's stock. Delcath Systems recently announced its fourth-quarter results for 2023 and provided updates on the initial rollout of Hepzato, which became available in January for treating metastatic uveal melanoma (mUM).
The company has seen promising early adoption and interest in Hepzato, leading management to increase their year-end goal from 15 to 20 sites where patients will be treated. To date, the treatment kit has been utilized at three medical facilities, with a fourth expected to join imminently. The company anticipates adding three additional sites in the early weeks of the second quarter of 2024, aiming to reach 10 by the end of that quarter, 15 by the third quarter, and 20 by the fourth quarter.
Delcath Systems also communicated their expectation to achieve $10 million in quarterly revenue by the fourth quarter of 2024 at the latest. This milestone is anticipated to activate financing of up to $25 million, which is projected to be sufficient for the company to reach cash flow positivity in the future, depending on the scale of their development plans for additional indications.
The firm's analyst noted that the launch of Hepzato is progressing as well as could be expected and suggested that the current lack of stock movement presents a buying opportunity for investors. The analyst's reiterated Buy rating and price target reflect confidence in Delcath Systems' growth trajectory and the successful market introduction of Hepzato.
InvestingPro Insights
As Delcath Systems (NASDAQ:DCTH) advances with the rollout of Hepzato, real-time data from InvestingPro provides a deeper look into the company's financial health and market performance. With a market capitalization of $101.63 million, Delcath holds more cash than debt, which is a positive sign for investors looking at the company's balance sheet resilience. However, the company's recent revenue figures show a decline, with a -24.05% revenue growth in the last twelve months as of Q4 2023, reflecting challenges in scaling up sales. The gross profit margin remains high at 69.25%, indicating a strong profitability potential for each dollar of sales.
InvestingPro Tips highlight that analysts are optimistic about sales growth in the current year, despite the company not being profitable over the last twelve months and quickly burning through cash. This aligns with the company's own projections for revenue growth and their goal to achieve cash flow positivity in the future. The significant return over the last week of 8.47% also suggests a positive market reaction to recent developments. However, it's important to note that analysts do not anticipate the company will be profitable this year, and the price has performed poorly over the last decade. With liquid assets exceeding short-term obligations, Delcath appears to be in a stable position to manage its immediate financial responsibilities.
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