Down 33% in 2022, is this ASX healthcare share a buy following the company’s latest trial result?

Shares in Volpara Health Technologies Ltd (ASX: VHT) finished trading on Thursday up 4.51% in the green at 70 cents.

Investors appeared to be reacting positively to a company announcement from Volpara today. Even though the release wasn’t price-sensitive in any way, it did cover some interesting progress with respect to the company’s VolparaDensity software.

Not only that, but brokers are constructive on the company this year, noting it has potential for outsized returns, Let’s take a look.

Is Volpara a buy in 2022?

According to the analysts at Bell Potter, Volpara could be a speculative buy this year. The broker recently retained its buy rating whilst slicing its price target to $1.30 per share.

Bell Potter reckons there is a disconnect between Volpara’s share price, that’s been stuck in a downward trend, and the company’s fundamentals, which have been growing.

The dislocation has its analysts excited, noting there is a potential buying opportunity before the market recognises the gap.

“Volpara has an expanding revenue base and appears to be on a pathway to cash flow breakeven over the course of calendar years 2022/2023”, it said.

“We conclude that the company is well funded in the short term and will continue to expand its revenue footprint both from existing clients and newly business opportunities”.

Morgans is also constructive on the company, valuing it at $1.87 per share back in January.

A figure of $1.58 arises after taking the average of these two valuations.

What did Volpara announce today?

Today Volpara announced the release of new screening recommendations by the European Society of Breast Imaging (EUSOBI) regarding the company’s software.

The EUSOBI made the recommendations for women with extremely dense breast tissue as a direct result of
findings from a 10-year long trial, that used VolparaDensity breast density assessment software.

“The new recommendations represent a significant shift from the biannual mammography exams currently advocated by most European screening organisations and offer further clinical and commercial validation of Volpara’s technology, designed to improve women’s health outcomes through personalised mammographic care”.

Micro-simulations that were modelled from the study’s findings suggest that “adding biannual MRI to biannual
mammography” – as was done in the trial – “would save 8.6 additional lives per 1,000 women invited, at a cost of 150,000 Euro per life, or 22,500 Euro per quality-adjusted life-year (QALY), indicating a cost-effective method”.

With these kinds of results, it doesn’t come as a surprise to why investors might have looked favourably on the company today, despite the announcement being deemed non-sensitive.

Those wanting to see the full version of the EUSOBI’s recommendations can do so by clicking here.

Volpara share price snapshot

The Volpara share price has been beaten down the last 12 months. During that time it has collapsed more than 43% and is down 33% this year to date.

During the past month, shares have continued the downtrend and traded 16%.

This kind of downbeat market sentiment is exactly what has brokers chomping at the bit on Volpara, as mentioned above.

The post Down 33% in 2022, is this ASX healthcare share a buy following the company’s latest trial result? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended VOLPARA FPO NZ. The Motley Fool Australia owns and has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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