Shares of Semler Scientific (SMLR), a small-cap medical technology company, surged by more than 38% over the last two trading sessions after the company disclosed that it has adopted Bitcoin (BTCUSD) as a primary reserve asset. Currently, Semler Scientific holds 581 Bitcoins worth roughly $40 million on its balance sheet.
Valued at $227 million by market cap, Semler Scientific develops products used to detect peripheral arterial disease. Despite its stellar gains this week - which SMLR is giving back today, down about 8.5% this afternoon - the healthcare stock is off about 79% from its all-time highs. Since its initial public offering (IPO) in early 2014, SMLR has returned 360% to shareholders.
Should You Buy SMLR Stock for its BTC Exposure?
In a press release, Eric Semler, the company’s chairman, explained, “Our bitcoin treasury strategy and purchase of bitcoin underscore our belief that bitcoin is a reliable store of value and a compelling investment.” He added, “We believe it has unique characteristics as a scarce and finite asset that can serve as a reasonable inflation hedge and safe haven amid global instability.”
Bitcoin has been among the best-performing asset classes, generating game-changing returns for investors. Today, the digital asset is valued at $1.3 trillion, rising over 20,0000% in the last nine years.
The maximum amount of BTC that can be mined is 21 million, and today, more than 19 million BTC are already in circulation. Bitcoin's decentralized nature and scarcity make it an asset that offers diversification despite its significant volatility.
Due to its market-thumping gains, Bitcoin is viewed as a store of value and a hedge against inflation. The U.S. Securities and Exchange Commission (SEC) in January approved the launch of multiple spot bitcoin ETFs (exchange-traded funds), which should attract higher institutional investments going forward.
MicroStrategy (MSTR) is another company that holds Bitcoin on its balance sheet. In fact, MicroStrategy may be the largest institutional holder of Bitcoin in the world. Due to its significant exposure to Bitcoin, shares of MicroStrategy are tied to the performance of the world’s largest cryptocurrency. In the last five years, BTC prices have surged over 750%, while MSTR stock is up over 1,100% since May 2019. Other notable companies that have invested in Bitcoin include Tesla (TSLA), Block (SQ), and PayPal (PYPL).
Semler emphasized that the company would focus on its core medical products and services as it continues to generate revenue, cash flows, and earnings from core operations.
What is the Target Price for Semler Stock?
Semler reported revenue of $15.9 million in Q1 of 2024, down 13% from the year-ago period. Its operating expenses totaled $8.9 million, which was 25% below prior-year expenses. As a percentage of sales, operating expenses fell to 56% from 66% in the last 12 months, allowing Semler to report a net income of $6.1 million or $0.88 per share, compared to $5 million, or $0.74 per share, last year.
Just one analyst covers SMLR stock, with a “Strong Buy” rating. The target price is $45, which is 50.4% above current levels.
Wall Street expects Semler to end 2024 with adjusted earnings of $1.96 per share. So, priced at 17x forward earnings, SMLR stock is expensive, given earnings are forecast to narrow by 27% year over year in 2024.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
