Butterfly Network Inc. (NYSE:BFLY) grew its share price by 21.99 percent on Tuesday to close at $9.93 apiece, as investor sentiment was bolstered by Needham & Company’s bullish rating for the stock.
In its initial coverage, Needham recommended investors buy the stock, while setting a price target of $10. The figure marked a 22.8 percent upside from its $8.14 closing price on Monday, or prior to the coverage.
The investment firm cited Butterfly Network Inc.’s (NYSE:BFLY) differentiated capacitive micromachined ultrasonic transducer (cMUT) technology as the key factor in its rating, saying that it is enabling the development of a new wave of medical technologies that spans many categories.
“We believe this Embedded business model should allow BFLY to participate in new markets, some of which represent significant opportunities,” it added.
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Sam Altman-Linked Merge Labs Partnership
Further buoying sentiment were earlier news this month that Butterfly Network Inc. (NYSE:BFLY) has been chosen by Sam Altman-backed Merge Labs as its multi-year exclusive ultrasound-on-chip supplier for the development of brain-computer interfaces.
The deal includes upfront and milestone-based license payments, hardware purchase commitments, and technology access fees to Butterfly Network Inc. (NYSE:BFLY), immediately providing high-margin recurring cash flows for the company, while ongoing royalties are expected on future commercial sales.
Additionally, licensing and chip supply revenues are expected to bolster gross margins for the company, similar to its partnership with Midjourney where it raked in $10.8 million in revenues—or a 439 percent jump—and pushed gross margins higher to around 71 percent.
The agreement also allows Butterfly Network Inc. (NYSE:BFLY) to maintain the right to license its technology to other companies in the field.
Hedge Fund Conviction More-Than-Doubles
Institutional investors appeared to be bullish for Butterfly Network Inc. (NYSE:BFLY), as evidenced by the 148 percent jump in committed capital in the second quarter of the year.
Data from Insider Monkey showed that during the period, 33 hedge funds held positions in the stock, up from 26 in the first quarter.
More notably, their combined holdings climbed to $425 million from only $171 million quarter-on-quarter.
Glenview Capital remained the largest hedge fund holder by far, owning $120.7 million of the company, followed by Hood River Capital with $111 million, D E Shaw with $53.8 million, and ARK Investment with $42.8 million.