- Raymond James has reiterated Outperform rating on LumiraDx Limited's (NASDAQ:LMDX) shares after 1Q revenue beat but lower than expected margins that ultimately do very little to impact long-term views of the company.
- They lowered the price target from $9 to $7.
- Revenues were 7% above Raymond James' view and 12% above consensus.
- The beat was driven by Fast Lab instead of platform revenues, which were below analyst view but mainly on a lack of instrument revenues as most went into the field free of charge (but associated with material test strip orders).
- Gross margins of 39.6% were impaired by 11 points due to instrument placements being fully expensed without matching revenues.
- The analysts expect the margin dynamics to resolve themselves over time as key strip margins are as expected.
- The analyst believes net instrument installs and progress on the pipeline will prove more impactful.
- More details should come on the pipeline at the newly announced June investor day. The combination of HbA1c (summer launch in Europe), CRP (launched in Europe), INR (launched in Europe), and COVID-19/flu combo tests (CE mark submission shortly) will already allow the LumiraDx platform to replace three separate instruments in the primary care setting.
- Hitting timelines and gaining traction with non-COVID-19 assays will be pivotal into 2H, but 1Q was, for the most part, "so far so good" on this front.
- Price Action: LMDX shares are up 1.05% at $3.84 during the market session on the last check Thursday.
