There has already been plenty of movement this earnings season. Yesterday investors were exiting positions in ASX healthcare stock Vitrafy Life Sciences Ltd (ASX: VFY).
Its share price fell almost 2% yesterday.
For context, the S&P/ASX 200 Index (ASX: XJO) gained nearly 1%.
Vitrafy Life Sciences develops a range of proprietary smart cryopreservation hardware devices along with Lifechain – an integrated, cloud-based software platform, to provide a complete, vertically integrated cryopreservation solution to retain the quality of cryopreserved biomaterials.
The company released FY26 Half Year Results that included:
- Underlying Operating Loss of.-$7.5m
- Operating Cash Outflow of $6.6m v -$4.0m PcP.
- Cash and cash equivalents ended the period at $22.8m v $29.5m at FY25
Despite yesterday's dip, the share price remains up more than 26% year to date.
Following its earnings results, the team at Bell Potter released updated guidance on this ASX healthcare stock.
Here is what the broker had to say.
Commercial visibility
Bell Potter acknowledged in its report that currently, most of this ASX healthcare stock's income comes from government R&D incentives and grants, not from selling products.
However, this is expected to change over time as the company starts selling its technology commercially.
Importantly, it has signed its first major commercial agreement with IMV Technologies.
This deal is important because it validates Vitrafy Life Sciences' technology and could lead to very large future revenue (over US$100m per year if widely adopted).
It's important for prospective investors to be aware there is still risk, because the agreement needs to be expanded into a long-term deal.
If the partnership succeeds, it could be a turning point for the company.
Execution risk remains in moving to the long-term agreement, but assuming the partnership is consummated, the IMV partnership may prove to be the game changer the market is seeking. We assume a c.12% penetration across bovine / porcine segments (FY30e).
Upside remains in tact
Bell Potter has maintained its speculative buy recommendation for this ASX healthcare stock.
The broker has a price target of $2.25 on Vitrafy Life Sciences.
From yesterday's closing price of $1.62, this indicates an upside of 38.89%.
Bell Potter said beyond the IMV partnership, this ASX healthcare stocks' share price could be boosted by positive results from its Phase 2 US military trial, FDA approval of its Guardion medical device, and progress in commercialising its cryopreservation technology for Cell & Gene Therapy.
These events would signal that the technology is working, approved, and starting to generate real commercial interest.
The post Why this ASX healthcare stock is a speculative buy appeared first on The Motley Fool Australia.
Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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