DIAGNOS has an upside of 488%, says Echelon

Following fourth quarter results that beat his estimates, Echelon Capital Markets analyst Stefan Quenneville remains very upbeat on DIAGNOS (DIAGNOS Stock Quote, Chart, News, Analysts, Financials TSXV:ADK)

Founded in 1996, DIAGNOS is an artificial intelligence company that has developed an image enhancement and AI analysis platform for early detection of diabetic retinopathy (DR), with the company currently in the commercialization stage with its CARA AI platform.

On Wednesday, DIAGNOS reported its Q4 and fiscal 2022 results. The company posted net income of -$725,000 on revenue of $152,000, ahead of the analyst’s topline expectation of $142,000.

“DIAGNOS Inc. released operating results for FQ422 and F2022 (period ending March 31, 2022) that beat our estimates as the roll out of the AI-based FLAIRE platform for the diagnosis and grading of diabetic retinopathy continued to pick up steam,” the analyst commented. “With operations expected to reach EBITDA and cash flow positivity by the end of F2023 and the potential for a Quebec government contract and a transformational deal with EssilorLuxottica, the world’s largest eye care company, we maintain our Top Pick rating and $1.00/shr target price ahead of what is shaping up to be a catalyst-rich next twelve months.”

Quenneville thinks ADK will post an EBITDA loss of $1.1-million on revenue of $3.4-million in fiscal 2023.

In a research update to clients July 13, Quenville maintained his “Speculative Buy” rating and one-year price target of $1.00 on DIAGNOS, implying a return of 488 per cent at the time of publication.

Quenville says continued commercial interest validates DIAGNOS’ platform, and sets the company up for a potentially busy future.

“While commercial agreements with New Look and Farmacias Benavides clearly demonstrate the technology’s commercial viability as a next generation diagnostic tool, particularly in the optical retail segment, the outstanding MoU with EssilorLuxottica serves as further validation of the AIbased platform’s detailed output, low cost, and ease of implementation. As such, the Company appears poised to secure agreements with an increasing number of optical retailers, networks of healthcare facilities, private and public payors, and strategic partners such as pharma and equipment manufacturers.”