Butterfly Network's Long-Term Growth Potential Outweighs Short-Term Challenges, Analyst Says

Analyst Andrew Brackmann maintains a Buy rating for Butterfly Network (BFLY) despite short-term challenges. The company has shown improvements in margins and adjusted EBITDA loss guidance, and demand for its innovative technology remains strong. Brackmann acknowledges the extended sales cycle and policy changes but sees these as short-term hurdles rather than long-term impediments.

Analyst Andrew Brackmann maintains a Buy rating for Butterfly Network (BFLY), despite facing short-term challenges. The company has demonstrated improvements in margins and adjusted EBITDA loss guidance, with strong demand for its innovative technology remaining intact. Brackmann acknowledges the extended sales cycle and policy changes but views these as short-term hurdles rather than long-term impediments.

In its second-quarter 2025 financial results, Butterfly Network reported the highest quarterly revenue and gross margins in company history, with revenue of $23.4 million, representing 9% year-over-year growth, and gross margins of 64%. The company also reported the lowest quarterly cash usage of $7.1 million [2]. The revised full-year revenue guidance was $91 million to $95 million, an approximately 13% growth, and the adjusted EBITDA guidance was improved.

Butterfly Network's strategic focus on international expansion and AI-driven innovation has paid off. The international revenue growth was bolstered by the global rollout of the iQ3 device, which offers higher-resolution imaging and AI integration. The company's AI roadmap is also gaining traction, with the upcoming Q3 2025 launch of Compass AI—a tool designed to streamline documentation and automate voice control. Early adopters like the University of Rochester Medical Center are already leveraging Butterfly's platform for AI-powered training tools [1].

The company's dual focus on human and veterinary diagnostics positions it at the intersection of two high-growth markets. In the human POCUS space, it faces established giants like GE Healthcare and Philips, but its ultrasound-on-chip technology and affordability give it a unique edge. In the veterinary market, Butterfly is capitalizing on the $1.78 billion point-of-care diagnostics sector, projected to grow at a 9.15% CAGR through 2030 [1].

While risks such as regulatory and clinical validation, competition, and leadership transition persist, Butterfly Network's platform-centric strategy mitigates many of these risks. The company's ability to monetize its technology beyond hardware sales, through AI app subscriptions and veterinary partnerships, could outperform its peers if executed successfully. Historical data from past earnings calls shows that while short-term volatility persists, the long-term trend following earnings calls has historically been positive [1].

Investors should monitor the Q3 Compass AI launch and the progress of its HomeCare commercialization. If these initiatives deliver, Butterfly could become a defining player in the future of accessible, AI-enhanced diagnostics.

References:
[1] https://www.ainvest.com/news/butterfly-network-bfly-q2-2025-earnings-call-catalyst-long-term-growth-2508/
[2] https://www.businesswire.com/news/home/20250801374436/en/CORRECTING-and-REPLACING-Butterfly-Network-Reports-Second-Quarter-2025-Financial-Results