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Raymond James sees a ‘key pipeline success factor’ for this MedTech stock

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  • Raymond James reiterated the outperformance rating on LumiraDx Limited LMDX shares after Q1 revenue beat but margins fell short of expectations which ultimately has very little impact on the company’s long-term views.
  • They lowered the price target from $9 to $7.
  • Earnings were 7% above Raymond James’ opinion and 12% above consensus.
  • The pace was driven by Fast Lab instead of platform revenue, which was lower than analysts said, but mostly on a lack of instrument revenue, as most went into the field for free (but associated with hardware test strip orders).
  • Gross margins of 39.6% were reduced by 11 points due to placements of fully expensed instruments with no corresponding income.
  • Analysts expect the margin dynamics to resolve over time as core margins are in line with expectations.
  • The analyst believes net instrument installations and pipeline progress will have more impact.
  • More details are expected to arrive on the pipeline at the recently announced June Investor Day. The combination of HbA1c (summer launch in Europe), CRP (launched in Europe), INR (launched in Europe) and combined COVID-19/flu tests (upcoming CE marking submission) will already allow the LumiraDx platform to replace three separate instruments in the primary care setting.
  • Hitting deadlines and gaining momentum with non-COVID-19 testing will be key in 2H, but 1Q was, for the most part, “so far so good” on that front.
  • Price action: LMDX shares were up 1.05% at $3.84 during Thursday’s last check trading session.