TD Cowen Reiterates Buy Rating on Butterfly Network, Sets $3.50 PT

Analyst Josh Jennings from TD Cowen reiterated a Buy rating on Butterfly Network, setting a $3.50 price target. The company reported $23.4 million in revenue for Q2, a 9% YoY growth, and an 18% growth in gross profit, resulting in a record high gross margin of 63.7%. Butterfly Network specializes in digital health with portable ultrasound devices powered by Ultrasound-on-Chip technology.

The U.S. AI in medical imaging market is poised for significant growth, projected to reach USD 2.93 billion by 2030, with a compound annual growth rate (CAGR) of 33.24% from 2025. This growth is driven by increasing demand for complex data management, government initiatives, and advancements in AI technologies [1].

Key drivers include the integration of AI in healthcare, such as Microsoft's partnership with Paige in digital pathology and Kinetica's real-time data analysis model. These initiatives aim to enhance patient care and improve diagnostic accuracy. For instance, in September 2023, Kinetica announced a Large Language Model (LLM) integrated with its advanced architecture, enabling real-time, ad-hoc data analysis using natural language on structured data [1].

Government initiatives are also playing a crucial role in market growth. The U.S. General Services Administration (GSA) initiated the Applied AI Healthcare Challenge in February 2023, encouraging diverse solutions for federal agencies to enhance medical care quality. This challenge addresses mental health, addiction, equity, supply chain safety, and cancer detection through AI technologies, fostering innovation and participation in the Year of Open Science [1].

The market is segmented by technology, application, modality, and end use. The deep learning segment dominated the market in 2024, accounting for 58.29% of revenue share, due to the growing availability of extensive medical imaging datasets for training purposes. The neurology segment, on the other hand, dominated the market in terms of revenue share, accounting for 37.46% in 2024, due to the increased use of AI in neurology for better patient care and higher accuracy [1].

The CT scan segment dominated the market in 2024 with a 34.86% share, primarily due to its higher standard imaging method for many clinical results. The hospitals segment also dominated the market, accounting for 52.99% of the share in 2024, due to patients' preference for comprehensive treatment processes [1].

Analyst Josh Jennings from TD Cowen reiterated a Buy rating on Butterfly Network, setting a $3.50 price target. The company reported $23.4 million in revenue for Q2, a 9% year-over-year (YoY) growth, and an 18% growth in gross profit, resulting in a record high gross margin of 63.7%. Butterfly Network specializes in digital health with portable ultrasound devices powered by Ultrasound-on-Chip technology [2].

References:
[1] https://finance.yahoo.com/news/u-ai-medical-imaging-market-104100823.html
[2] https://finance.yahoo.com/news/u-ai-medical-imaging-market-104100823.html