ICAD Inc.'s (ICAD:NASDAQ) performance in Q4/21 suffered from the surge of COVID-19's Omicron variant, but the cancer detection and therapy solutions company is expected to recover from the setback this year, reported Oppenheimer analyst Francois Brisebois in a March 1 research note.
"We continue to view iCAD's technology as best in class with plenty of room for growth," Brisebois wrote. This statement is supported by Oppenheimer's Outperform rating and $16 per share price target on the biotech firm. The latter implies a significant potential return as iCAD is currently trading at around $4.83 per share.
Brisebois reviewed how iCAD fared and what it experienced during 2021's final quarter. Topline sales were as expected, in line with revised guidance, coming in at $7.8 million ($7.8M). They did, however, fall short of original estimates.
Earnings per share in Q4/21 of ($0.17) missed Oppenheimer and the Street's estimates of ($0.11), reportedly due to slightly higher than expected operating expenses. At year-end, iCAD had $34.3M in cash on the balance sheet.
"ICAD seems in a solid position given its operational burn of only $9M in full-year 2021," Brisebois commented.
What drove iCAD's Q4/21 underperformance, Brisebois indicated, was the Omicron variant surge. About one-third of the company's global sales team caught the virus, resulting in staff shortages and limited resources. This all led to the postponement of numerous deals expected to be consummated in December, typically iCAD's busiest Q4 month.
"While optimistic of a rebound, we don't expect an immediate recovery in Q1/22," wrote Brisebois.
The analyst pointed out that moving forward, iCAD's new CEO Stacey Stevens plans to implement some focused commercial strategies for the company's detection business. As well, iCAD will continue its four ongoing studies pertaining to its breast cancer clinical decision support tool, ProFound AI Risk, "which we believe should help adoption (key long-term value driver)," Brisebois noted.
Also, iCAD intends to slowly roll out a subscription-based model in about a year. This would add a recurring revenue stream and alleviate prospective buyers' concerns about paying one upfront cost.
Brisebois relayed that management still expects dermatology to be a significant part of iCAD's therapy portfolio in 2022, and given its strength last year, Oppenheimer finds this encouraging.
"In 2021, dermatology controllers was the main value driver (product revenues saw 112% year-over-year growth) due to the favorable regulatory and reimbursement changes, and we continue to expect growth in 2022," Brisebois wrote.
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