William Blair initiated coverage on Butterfly Network Inc. (NASDAQ:BFLY), a digital health company that provides portable, semiconductor-based ultrasound technology and intuitive software.

The company reported a fourth-quarter adjusted loss of 5 cents per share, beating the consensus of 10 cents.

Sales increased 35% year over year to $22.35 million, beating the consensus of $21.97 million, driven by the recently launched next-generation iQ3 probe's higher selling price and increased enterprise software revenue.

Product revenue was $14.7 million, an increase of 45% versus the prior year period, driven by the 22% increase in units fulfilled year-over-year and the iQ3's higher selling price.

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Butterfly Network expects 2025 sales of $96 million—$100 million, compared to a consensus of $97.80 million and an adjusted EBITDA loss of $37 million—$42 million.

"Butterfly is pioneering the digital ultrasound market, democratizing access to imaging and expanding its total addressable market (TAM)," William Blair writes. "The valuation ascribes only some success in the core point-of-care and hospital markets, but with execution on growth objectives, we believe shares can rise meaningfully."

Analyst Andrew Brackmann initiates with an Outperform rating and notes that the company's core business can grow roughly 20% over the next several years and likely closer to a low-to-mid-teens revenue compound annual rate between 2024 and 2030.

The William Blair analyst writes Butterfly's homecare business has strong potential to boost revenue and expand market opportunities over the next 12 to 24 months.

While still in its early stages, the analyst sees it as a key growth driver that could become a multi-hundred-million-dollar business within five years. Despite this potential, the share price does not yet reflect these efforts.

Price Action: BFLY stock is up 2.05% at $2.74 at the last check Monday.

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