The Volpara Health Technologies Ltd (ASX:VHT) share price is pushing higher on Thursday. Here’s why and why it could go even higher…
The post Why the Volpara (ASX:VHT) share price is pushing higher today appeared first on The Motley Fool Australia. –
The Volpara Health Technologies Ltd (ASX: VHT) share price has been a positive performer on Thursday.
In morning trade, the healthcare technology company’s shares are up over 3% to $1.27.
Why is the Volpara share price pushing higher?
The Volpara share price was given a boost today by the release of an investor presentation.
That presentation included a number of updates, which appear to have gone down well with investors.
Volpara began by reminding investors of its sizeable recurring revenue opportunity. The company’s software leverages artificial intelligence (AI) to improve the early detection of breast cancer by analysing mammograms and associated patient data.
This allows it to provide personalised breast care through clinical decision support and practice management tools. It is also a cost-effective solution to reduce breast cancer deaths.
What is its market opportunity?
Management estimates that breast cancer screening is a ~US$750 million Annual Recurring Revenue (ARR) opportunity for Volpara.
To achieve this ARR, the company is focusing on growing its market share and average revenue per user (ARPU) metric. In respect to the latter, at the end of the first half, its ARPU stood at US$1.16. However, management is aiming to increase this to US$10 in the future. This is by increasing the number of additional products used during the screening process.
While this might seem like an overly ambitious jump, management has reason to believe it is possible.
It notes: “Average Revenue Per User (ARPU) is the average revenue achieved per woman screened per year at a site – currently, our ARPU over the entire installed base is US$1.16, it’s at that level because most users have only the Aspen product currently which was historically sold as capital with a small service & maintenance contract, not as SaaS.”
“Since 1st November 2019, all new quotes/proposals are SaaS contracts, and most new deals are significantly above US$1.16 ARPU comprising multiple products – in Q2, ARPU on new deals was US$1.75 – US$4.30.”
Volpara isn’t resting on its laurels and is actively targeting other opportunities. This includes the lung cancer market with its Volpara Lung software.
In addition to this, the company is looking out for opportunities that will emerge from COVID-19.
It advised that it is focusing on Risk & Genetics and is positioned strongly versus other companies due to its balance sheet capacity and access to capital. In light of this, it is tracking merger and acquisition opportunities that would add to its US market share or increase its ARPU.
Is the Volpara share price in the buy zone?
According to a note out of Morgans from last month, the Volpara share price could be in the buy zone right now.
Its analysts currently have an add rating and $1.92 price target on the company’s shares. This implies potential upside of ~50% for its shares over the next 12 months.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia 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.