On Thursday, Chardan Capital Markets adjusted its stance on shares of Allurion Technologies (NYSE:ALUR), downgrading the stock to Neutral from Buy. The revision follows Allurion's announcement of its third-quarter 2024 revenue, which amounted to $5.4 million. Analysts at Chardan pointed to a pattern of underwhelming business performance, noting that the company has not met expectations for the past four quarters.
The company also revised its full-year 2024 revenue guidance downward, now anticipating revenues to fall between $30 million and $35 million. The downgrade reflects concerns about Allurion's ability to capitalize on potential opportunities, despite the firm's positive outlook on the upcoming results of the AUDACITY U.S. pivotal study, which is expected by the year's end.
Chardan remains cautiously optimistic about the potential positive outcome of the AUDACITY study. A successful result could provide Allurion with an opportunity to raise additional capital at a share price higher than its current level. However, the firm emphasized the necessity for Allurion to demonstrate its capability to take advantage of the significant market outside the United States (OUS).
In the report, Chardan highlighted the critical nature of the company's future performance in determining continued share price appreciation. The analysts believe that Allurion needs to show concrete evidence of its ability to engage with and benefit from the existing OUS market opportunities to support further growth in its share value.
In other recent news, Allurion Technologies faced a challenging third quarter in 2024 as its revenue fell to $5.4 million from the previous year's $18.2 million. This significant decrease was largely due to a product recall in France, which resulted in a $1.2 million revenue reduction. Despite these setbacks, the company saw a 20% increase in procedure volumes in the Middle East and remains hopeful about its strategic shift and product positioning for 2025.
As part of its strategy, Allurion plans to cut its operating expenses by half and reduce its workforce by 50% by 2025. The company is also progressing with the AUDACITY trial, expecting data by the end of 2024, and seeking FDA approval for the Allurion Balloon.
Recent developments also show the company's Virtual Care Suite gaining traction, which is expected to contribute to future revenue growth. While Allurion didn't provide specific revenue guidance for 2025, the company remains optimistic about its growth potential.
InvestingPro Insights
The recent downgrade by Chardan Capital Markets aligns with several InvestingPro metrics and tips for Allurion Technologies (NYSE:ALUR). InvestingPro data shows that ALUR's revenue for the last twelve months as of Q2 2024 was $47.59 million, with a concerning revenue growth decline of -23.59% over the same period. This decline is consistent with the company's downward revision of its full-year 2024 revenue guidance.
InvestingPro Tips highlight that ALUR is "quickly burning through cash" and "may have trouble making interest payments on debt," which could explain the market's concern about the company's financial stability. Additionally, the tip that "analysts anticipate sales decline in the current year" corroborates Chardan's cautious stance on Allurion's business performance.
Despite these challenges, ALUR maintains "impressive gross profit margins," with InvestingPro data showing a gross profit margin of 76.19% for the last twelve months as of Q2 2024. This suggests that if Allurion can overcome its revenue challenges, it has the potential for strong profitability.
Investors should note that ALUR is "trading near 52-week low" and has "taken a big hit over the last week," with a 1-week price total return of -25.65%. This price action reflects the market's reaction to the company's recent performance and outlook.
For those interested in a deeper analysis, InvestingPro offers 15 additional tips for ALUR, providing a comprehensive view of the company's financial health and market position.
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