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Thread: $LGVW: The Ultrasound market is a ~$7B global medical systems opportunity in 2020, growing to over $10B by 2025. The market has been long dominated by expensive cart systems from GE, Siemens and Phillips at expensive price points (>$50K).
$LGVW: Newer disruptors in handheld systems, such as Butterfly Network are using AI and inexpensive handheld hardware ($2K + $500 annual fee) to “democratize” the use of Ultrasound for many new applications and types of users. This segment of handheld is growing at 25% CAGR.
$LGVW: Creates opportunity to expand the market and fundamentally changes the landscape for Ultrasound. Similar to how SWA ($LUV) created low cost point-to-point flying, reducing costs, by doing away with many frills, thereby expanding the market and increasing the # of flyers.
$LGVW: Butterfly Network was founded in 2011, by Jonathan Rothberg, an industry veteran and luminary. The company has raised over $350M from multiple investors including the Bill and Melinda Gates foundation.
$LGVW: 3 differentiators: a) handheld hardware (ultrasound SoC – System on Chip), patented capability to provide 3D imaging on depth, b) Artificial intelligence for imaging analysis and c) a network of experts with content – creates “doctor’s aides” into ultrasound technicians.
$LGVW: Butterfly Network has chosen to go public on Nov 25th via a SPAC with Longview Capital ($LGVW) providing it with $584 million in cash, and valuing the company at $2B (post money). It currently trades (12/29/20) at $20.5, valuing the company at $4.17B.
$LGVW: 94X multiple on '20 LTM revenue ($44M), 53X NTM revenue ($78M) and, 30X '22 revenue ($137M). Rich bcos the expected 70% revenue growth rates for 4 years (2021-2024), strong mgmt team, unique tech, seasoned backers and disruptive approach which could grow over 100% .
$LGVW: My recommendation is to initiate a long term position, with an expectation to hold for 4 years, when it will be at $235M in revenue and likely at $10B in market capitalization (42X Revenue), representing a ~139% upside in 4 years (~31% CAGR).
$LGVW: In 2021 I expect it to consolidate and have put a price target of $24.5 by Dec 2021, representing a 29% upside from its current price.
$LGVW: It is likely that momentum investors will ignore the stock by Q1 / Q2 when the acquisition is complete and the stock lists as $BFLY, at which point I expect the stock to drop to between $15 – $17 per share. My recommendation is to dollar cost average (DCA)
$LGVW: If the company delivers higher revenues that projected in its first two quarters of being public – expectations are $18 to $20M in Q1 and Q2 2021, then I would expect the stock to further gain in price to be at $30.
$LGVW: The biggest risks for Butterfly Network stock include a) lack of revenue growth due to insufficient trained technicians, b) an incredibly competitive landscape with over 80 other companies in the space, c) likelihood of Apple ($APPL) to enter the space
$LGVW: Other risks: d) very high valuation getting a significant haircut post the merger due to momentum investors moving on and e) lack of long public company operating experience making internal controls for finance, reporting and operations a material weakness.
$LGVW: To read the entire analysis and learn about Ultrasound visit my detailed analysis at https://bestengagingcommunities.com/2020/12/30/the-ultrasound-market-stock-recommendation-longview-acquisition-corp-butterfly-network-lgvw-bfly/
$LGVW: Completed my write up (long) @Pharmdca @pawcio2009 @Bios_n_Techs @skaushi @StockMarketNerd and @frankblaze
