MoneyTalks: Two ASX medical imaging stocks under microscope –...

MoneyTalks: Two ASX medical imaging stocks under microscope – both have big price targetsTwo ASX medical imaging stocks have been examined by brokers – and found to be very underpriced – one with shares selling at about half its price target.Eddy Sunarto3 min readFebruary 7, 2024 - 1:54PMStockheadBrokers have taken a good hard look at these two medical imaging stocks. Picture: Getty ImagesMoneyTalks is *’s regular recap of the ASX stocks, sectors and trends that fund managers and analysts are looking at right now.Two ASX medical imaging stocks have been examined by brokers – and found to be very underpriced – one with shares selling at about half its price target. Ord Minnett has initiated coverage of 4DMedical (ASX:4DX) with a Speculative Buy recommendation and $1.20 price target (verses current price of 64c).And that price, at 1.30pm Wednesday (AEDT) had been inflated with a share price rise of more than 9 per cent for the day.For the latest ASX news, sign up here for free * daily newsletters4DX is a global medtech company focused on the commercialisation of its flagship respiratory imaging platform, XV Technology.Ord Minnett believes 4DX is strongly positioned to disrupt the $US31 billion global respiratory diagnostics market, with its software products offering a step-change in diagnostic capability versus the incumbent tech (e.g. chest X-rays, CTs).The broker sees 2024 as an inflection point for the business, citing several factors including the potential for rapid growth in the US.4DX’s commercialisation in the US market has accelerated in FY24 following the recent win with Philips, targeting XV Technology delivery into Veterans Affairs (VA). There is the potential here to accelerate sales in the US via this Philips reseller agreement.Medicare reimbursement in the US has also been granted for XV LVAS at $US299 a scan.There is a potentially huge market, says Ord Minnett, as US Medicare covers around 65.7 million people in the country (or around 20 per cent of the population on 4DX estimates).This coverage is expected to affect care delivery at more than 4000 Medicare-certified hospitals across the US.Secondly, the recent acquisition of diagnostics product company Imbio can drive revenue and cost synergies toward free cashflow break-even.Imbio is a well-regarded imaging AI business based in Minneapolis. Ord Minnet believes the acquisition offers 4DX a more than $US600 million revenue opportunity which it could penetrate rapidly.MORE FROM *: Juniors ‘ready for uranium surge’| Don’t break your compound| Expert bullish on most-shorted stockAnd thirdly, Ord Minnett believes that 4DX can maintain its recent momentum in Australia – an addressable market of around $400 million – and push towards 150 installed sites by FY24/25.“4DX’s two key markets, US and Australia, represent more than 45 per cent of the global market,” Ord Minnett said.“We view 4DX’s risk-reward as compelling at current levels, with its 6x FY25 EV/sales comparing favourably versus peers on a growth adjusted basis.” Mach7 is a “long-term play”Wilsons Advisory has maintained its Overweight rating on Mach7 (ASX:M7T), with a target price of $1.05 a share (versus current price of nearly 70c).Mach7 is a health technology company specialising in enterprise imaging solutions. Their technology allows healthcare practitioners across all departments and specialities to view and store diagnostic imaging.Its most recent half results show $13.3 million in total revenue, 19 per cent higher than pcp.“Whilst we expect ongoing catalysts with the announcement of new contract wins, the largest catalyst for Mach7 is the outcome of the Phase 2 VA (Veterans Affairs) contract worth $48 million,” said the note from Wilsons.But as expected, Mach7 announced an FY24 revenue downgrade owing to an increasing amount of healthcare facilities opting for subscription contracts versus capital contracts, removing the 50-60 per cent of contract value that it would otherwise receive upfront.Visit *, where ASX small caps are big deals“This is not surprising, and to be frank, was well overdue,” said Wilsons.“The market’s reaction was neutral because the revenue downgrade was countered by the fact that Mach7 increased FY24 sales order guidance by 25 per cent, now targeting more than $60 million.”Wilsons said it remained positive on Mach7, given sales orders are tracking ahead of expectations, and catalysts in FY24 (VA contract) present upside to forecasts.“We maintain our Overweight rating with an updated $1.05/sh price target,” it said. “Pleasingly, despite delayed revenue, Mach7 is targeting cash flow break-even in FY24.“The key question that remains is the ability of Mach7 to capture capital revenue in H2 FY24. Mach7 however is a long-term play, we just hope investors don’t miss the boat,” said Wilsons.This content first appeared on unauthorised investment adviceThe views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of *. * does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.SUBSCRIBEGet the latest * news delivered free to your inbox. Click hereMore related storiesStockheadHow Legacy Minerals attracted a gold behemothRead moreStockheadWhich ASX directors are backing a nickel price recovery?Read moreSubscribe SALESign InSearchHomeMembershipAbout UsContact UsOur News NetworkOur PartnersOur AppsA NOTE ABOUT RELEVANT ADVERTISING: We collect information about the content (including ads) you use across this site and use it to make both advertising and content more relevant to you on our network and other sites. 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