AIDX wins bullish new price target at Beacon

Following the company’s first quarter results, Beacon Securities analyst Gabriel Leung has raised his price target on Healwell AI (Healwell AI Stock Quote, Chart, News, Analysts, Financials TSX:AIDX).

On May 14, announced its Q1, 2024 results. The company posted revenue of $4.58-million, a topline that was up 139% year-over-year.

“The first quarter marked an exceptional continuation of our journey since rebranding as Healwell AI last year and embracing our mission to revolutionize healthcare and enhance lives through early disease detection, powered by cutting-edge AI and data science technologies,” CEO Dr. Alexander Dobranowski said. “Just six months after powering our partner Well’s first-generation physician co-pilot, which was focused on rare disease detection, we have launched what we believe is currently the Canadian market’s only commercially available AI-powered physician co-pilot that is integrated with a major EHR and assists with chronic disease detection. Given the importance of chronic disease to our health care ecosystem as the leading cause of death and disability, we couldn’t be prouder to bring this profound new capability to physicians via our partnership with Well and our exclusive role powering their Well AI decision support tools.”

Leung says this is a company that could scale very quickly.

“With its war chest of ~$30M, we believe the company has the capacity to increase its revenue run-rate to the ~$80M range ($40M prior to the equity financing) if we factor in cash / shares / earnouts. Given the company’s pipeline of AI / healthcare software M&A targets and organic growth prospects, we believe the company has the opportunity to quickly scale from its current $20M revenue runrate, which could drive significant operating leverage acting as a key catalyst for the stock.

In a research update to clients May 24, Leung maintained his “Speculative Buy” rating but raised his price target on AIDX from $1.10 to $1.95.

The analyst thinks AIDX will post EBITDA of negative $7.4-million on revenue of $21.6-million in fiscal 2024. He expects those numbers will improve to EBITDA of negative $3.6-million on a topline of $30.1-million the following year.

We are maintaining our Speculative Buy rating, but raising our target price to $1.95 (was $1.10), which is based on 14x CY25e EV/Sales (based on pro-forma cash / debt),” Leung explained. “While our target multiple does represent a premium to the group, it also reflects what we expect to be a series of (near-term) M&A deals, which could meaningfully change the company’s financial profile.”

Disclosure: Healwell AI is an annual sponsor of Cantech Letter and Nick Waddell owns shares of the company.