Butterfly Network Outlook: Technical Weakness and Mixed Analyst Signals

Market Snapshot

Headline Takeaway: Butterfly Network (BFLY.N) is facing a weak technical outlook despite some positive cash flow trends, with internal diagnostic scores flagging overbought conditions and bearish momentum. Investors are advised to avoid the stock due to its poor trend quality.

News Highlights

Recent health care-related news includes a $424.9 million municipal bond sale for Stanford Health Care and updates on private equity healthcare acquisitions. While these developments reflect continued investment in the sector, Butterfly Network has not directly benefited from the attention. Additionally, tariff uncertainty has led to mixed performance in the broader healthcare space, with defensive plays gaining traction. However, Butterfly Network’s fundamentals and technicals suggest caution for investors seeking near-term upside.

Analyst Views & Fundamentals

Analysts have been largely optimistic in the short term. The simple average rating is 5.00, while the performance-weighted rating is 3.47. This disparity indicates that while there is a bullish tone, it is not strongly supported by historical performance. The sole active analyst, Ilya Zubkov of Freedom Capital Markets, has issued a “Strong Buy” rating, with an impressive 100% historical win rate and a 30.26% average return on their single previous recommendation.

However, the fundamentals do not align with the bullish outlook. Key metrics include:

• ROA (%): -22.62% (internal diagnostic score: 1.0)
• Net profit margin (%): -93.46% (score: 1.0)
• Net profit / Total operating revenue (%): -93.46% (score: 1.0)
• Cash-UP: 44.87% (score: 2.0)
• Cash-MV: 42.32% (score: 0.0)

These figures underscore weak profitability and capital efficiency, with the only positive indicator being some liquidity strength. The lack of alignment between analyst ratings and fundamentals signals that caution is warranted.

Money-Flow Trends

Recent fund-flow data reveals a mixed picture. The overall inflow ratio is at 48.82%, with medium-sized inflows being slightly stronger than small or large ones. Specifically:

• Small inflow ratio: 50.13%
• Medium inflow ratio: 50.16%
• Large inflow ratio: 50.55%
• Extra-large inflow ratio: 48.19%

However, block flows remain negative, with a block inflow ratio of 48.74%, indicating that large investors are either holding back or actively withdrawing. This divergence suggests that while retail and smaller investors are cautiously optimistic, institutional money is not backing the stock’s near-term prospects. The internal diagnostic fund-flow score is 7.82, which we rate as “good,” but this may be misleading given the sector’s broader volatility and mixed signals.

Key Technical Signals

Technically, Butterfly Network is struggling. The internal diagnostic technical score is 3.56, with a “weak trend” flagged as a red flag for investors. The bearish signals dominate, with three bearish indicators and zero bullish ones in the last five days. Notable indicators and scores include:

• Long Lower Shadow:Biased bearish (score: 1.0)
• RSI Overbought:Biased bearish (score: 1.0)
• MACD Golden Cross:Neutral rise (score: 6.0)
• MACD Death Cross:Neutral rise (score: 6.0)

Recent chart patterns have shown mixed behavior, with Long Lower Shadow and RSI Overbought being the most prominent bearish signals in the past week. This suggests that while some short-term momentum indicators are neutral, the overall trend remains fragile and prone to correction.

Conclusion

Investors should consider waiting for a pull-back before committing to Butterfly Network, given the weak technical setup and misaligned fundamentals. The internal diagnostic technical score of 3.56 and the presence of overbought conditions suggest that the stock is currently at risk of a near-term correction. While analyst sentiment remains bullish, the underlying financials are under pressure. If the company can demonstrate improved profitability and stronger cash generation, it might regain momentum. Until then, a cautious stance is recommended.