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Should You Invest in Wall Street's Newest AI Growth Stock?
While the artificial intelligence (AI) megatrend has captured the imagination of global investors, the rally so far has been driven by a relatively small handful of stocks, such as Nvidia (NVDA) and Broadcom (AVGO). Given the projected size of the AI market opportunity over the longer term, this suggests that many other potential AI multi-bagger stocks are still flying under the radar.
One such stock just might be Nasdaq newcomer CeriBell (CBLL), a medical device manufacturer valued at a market cap of $917 million. CeriBell is the developer of the first AI-powered point-of-care EEG (electroencephalography) diagnostic system. It aims to revolutionize seizure management in acute care, establish the CeriBell System as the standard of care for EEG in acute care settings, and help clinicians save patient lives.
Shares of CeriBell went public last month, and the stock soared 36% on its trading debut. Since then, CBLL has rallied another 9% - and analysts see more upside in store. Here's why Wall Street thinks this AI growth stock is a buy.
The Bull Case for the AI Stock
CeriBell is a commercial-stage medical technology company focused on disrupting the diagnosis and management of patients with severe neurological conditions. The biotech combines rapidly deployable hardware with AI-powered algorithms, allowing the Ceribell System to enable rapid diagnosis and monitoring of patients. This system is cleared by regulators for suspected seizure activity, and is used in intensive care units and emergency rooms in the U.S.
The company increased its sales from $25.9 million in 2022 to $45.2 million in 2023. In the last 12 months, its top line totaled $54.5 million, with a gross profit of $46.3 million. However, the company reported an operating loss of $32.4 million, wider than its loss of $30 million in 2023.
CeriBell priced its IPO at $17 per share and currently trades at $27, which means it has already gained over 50%. The company raised $180.2 million in its public offering at a $578 million valuation.
Last month, CeriBell presented data in five abstracts, including 937 point-of-care EEG cases and recordings highlighting its product's potential.
In the research study, CeriBell demonstrated:
- A shorter median hospital stay and patients monitored with the company were 33% less likely to leave the hospital with significant functional disability.
- Its system provides reliable signal quality for up to 24 hours, which suggests it supports long-term continuous monitoring.
- The importance of standardizing diagnosis with AI tools.
- Improved detection of seizure-related patterns.
Analysts Are Bullish on the AI Stock
Investment firms such as JPMorgan and Canaccord Genuity have now initiated coverage of CeriBell. JPMorgan set an “overweight” rating on CBLL due to its recurring revenue business model, high gross margins, and sales growth of over 30% in the next five years.
The investment bank noted that CeriBell operates in an underpenetrated market forecast at $3 billion. Moreover, it has room to expand into other clinical verticals, such as ischemic stroke. JPM has a target price of $32 for the stock, which is the highest on the Street.
Canaccord also has a “buy” rating with a target price of $30 due to CeriBell's highly sticky business model, high entry barriers, recurring sales, and minimal competition.
With five analysts now in coverage, all five call CBLL stock a “strong buy.” The average price target is $31.25, while the Street-high target of $32 - shared by JPMorgan and BofA - implies expected upside of 17.3% from current levels.
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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.
