TD Cowen reiterates Buy rating on Butterfly Network stock after key study

TD Cowen has reiterated its Buy rating and $3.50 price target on Butterfly Network (BFLY), citing strong clinical evidence from the POCUS-CARE trial showing its iQ3 device reduces costs and patient length of stay. Despite a recent stock decline of over 30% since July attributed to temporary macroeconomic headwinds, TD Cowen views the pullback as overdone, emphasizing the company's robust balance sheet, 23% LTM revenue growth, and an 'undervalued' stock based on fair value analysis. This positive outlook is further supported by Butterfly Network's Q2 2025 results, which reported record revenue of $23.4 million and an EPS beat, alongside a new partnership with Clipper Distributing for the veterinary market.

Analysis

TD Cowen's reiteration of a Buy rating and a $3.50 price target for Butterfly Network (BFLY) is underpinned by new, positive clinical data from the POCUS-CARE trial. The study validates that the company's iQ3 device can significantly reduce inpatient costs and length of stay, strengthening the product's value proposition and supporting its ongoing commercial rollout. Despite the stock's substantial price decline of over 45% in the past six months, TD Cowen views the pullback as an overreaction to temporary macroeconomic headwinds rather than systemic issues. This perspective is supported by the company's solid financial health, evidenced by a strong balance sheet with more cash than debt, a healthy current ratio of 5.68, and robust 23% revenue growth over the last twelve months. Recent performance further substantiates this view, with Q2 results showing record revenue of $23.4 million (a 9% YoY increase) and an EPS loss of $0.03, which surpassed expectations. With revised full-year revenue guidance of $91-$95 million deemed achievable and a new partnership with Clipper Distributing opening the veterinary market, the current valuation is presented as attractive, with both analyst targets and fair value models suggesting the stock is undervalued.

Key Decisions for Investors

• Given the positive clinical trial data, strong analyst endorsement, and a valuation described as undervalued, investors might view the recent significant stock pullback as a potential buying opportunity, contingent on their risk appetite.
• Investors should closely monitor the adoption and sales velocity of the iQ3 device, as its successful rollout is the central catalyst cited in the bullish analyst thesis.
• The primary near-term risk stems from macroeconomic pressures delaying purchasing decisions; therefore, monitoring future earnings calls for any changes to company guidance or commentary on customer capital spending is crucial.
• The new partnership to enter the U.S. veterinary market presents a potential new growth vector, and its contribution to revenue should be tracked in upcoming financial reports.