Investors witnessed a spectacular surge in Butterfly Network‘s stock, listed as BFLY, on September 4. The astounding 26.9% uptick followed the company’s announcement of the commercial release of its cutting-edge third-generation handheld ultrasound system, Butterfly iQ3, in Europe. The launch garnered immense excitement among stakeholders, especially fueled by the remarkable success of iQ3 in the U.S. market since its unveiling last February.

Blossoming in Europe too, Butterfly iQ3 obtained EU MDR certification in March and aligns completely with the Restriction of Hazardous Substances Directive. The device is now accessible in all European nations and the United Kingdom, already having made its debut in Canada during the second quarter. With sights set on expansion, the company is currently pursuing regulatory clearances for iQ3 in additional regions.

Presenting the pinnacle of Butterfly Network’s portable ultrasound innovations, the Butterfly iQ3 stands as a beacon in the company’s product suite alongside the second-generation iQ+. Evolving with BFLY’s cutting-edge P4.3 chip, the iQ3 showcases heightened computing power, ensuring superior image quality compared to its predecessor. Enriched with advanced 3D imaging tools for enhanced usability and boasting a sleek, ergonomic design, the iQ3 commands a higher price point than the iQ+, promising an accelerated revenue growth trajectory.

So far this year, BFLY’s shares have surged by an impressive 39.9%, significantly outpacing the industry’s 13.5% downturn, propelled by the resounding success of Butterfly iQ3 in the U.S. market. In comparison, the S&P 500 Index has climbed by 15.9% over the same duration.

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U.S. Triumph with iQ3

Butterfly Network’s remarkable 16% revenue escalation in the second quarter stemmed mainly from the robust reception of Butterfly iQ3 in the United States and the additional sales influx following its Canadian market debut. An astonishing 74% of the company’s total online orders were for iQ3 in the quarter, with iQ3 accounting for 89% of sales via all channels in Canada. Moreover, the company initiated a strategic competitive device upgrade program in the quarter, enabling customers to transition their prior non-Butterfly products into shiny new iQ3 units. This initiative presents an added avenue for growth, with over a thousand probes having undergone upgrades in the quarter.

During the second quarter, iQ3 sales represented half of the total unit sales, with a dominant 75% share in the United States.

Enhancing Patient Care with iQ3

Butterfly Network’s revolutionary iQ3 introduces novel advancements in 3D capabilities – iQ Slice and iQ Fan. iQ Slice facilitates the capture of up to 46 ultrasound slices simultaneously across a broad angle, streamlining image acquisition without requiring expert manipulation. On the other hand, iQ Fan serves as a dedicated lung tool, reducing the requisite movements for capturing crucial information to guide clinical decisions.

Complementing a rich feature set including over 20 anatomical presets, six imaging modes, artificial intelligence, cutting-edge imaging tools, and a suite of calculation capabilities, iQ3’s compact, ergonomic design has been instrumental in its rapid adoption in the U.S. and Canada, with promising prospects in European markets. Sporting a 17% smaller probe face and a 7% reduction in size compared to the iQ+, the new device comes equipped with a robust battery providing up to 2 hours of uninterrupted scanning time and charges 2.5 times faster.

These innovative attributes of the Butterfly iQ3 significantly elevate echo image quality and enhance the biplane mode for cannulation, presenting tangible benefits in managing patients with intricate IV access.

Strategic Positioning and Market Outlook

Butterfly Network presently holds a Zacks Rank #2 (Buy).

Among other standout stocks in the broad medical domain are industry stalwarts like Boston Scientific BSX, Apyx Medical APYX, and Universal Health Services UHS, each currently holding a Zacks Rank #2.

Boasting a long-term estimated growth rate of 12.6%, Boston Scientific has consistently outperformed earnings estimates over the trailing four quarters, with an average surprise of 7.2%. Year to date, BSX shares have surged by 41.4%, eclipsing the industry’s 12.3% growth rate.

Apyx Medical is poised for a 20% growth rate by 2025. Despite missing earnings estimates over the last four quarters, the company presents exciting prospects with a Zacks Rank #2. However, Apyx Medical shares have seen a decline of 49.3% year to date as opposed to the industry’s 12.3% growth.

Universal Health Services eyes a remarkable 19% estimated growth. With earnings exceeding estimates consistently in the previous four quarters, boasting an average surprise of 14.58%, the company’s shares have soared by 56.1% year to date, outmatching the industry’s 48% growth.

Article Source: Zacks Investment Research