On Monday, Butterfly Network Inc. (NYSE:BFLY) shares declined by more than 15% after announcing its most recent quarterly results. The company reported its fiscal third-quarter results before markets opened, beating analyst expectations on earnings. However, revenue for the quarter fell short of estimates despite posting a massive growth.
Butterfly Network posted fiscal third-quarter GAAP earnings per share of -$0.07, beating the consensus for analyst expectations of -$0.25. On the other hand, revenue for the quarter increased by 44.3% from the same quarter a year ago to $14.62 million, missing the average Street forecast by $4.88 million.
The company now expects a full-year 2021 revenue in the range of $60 million to $62 million, reflecting annual growth of 30% to 34%. However, it still expects an adjusted EBITDA loss in the range of $125 million to $135 million for the year.
Is it still risky to buy BFLY shares?
From an investment perspective, Butterfly Network shares trade at a steep price-sales ratio of 51.79, making the stock less attractive to value investors.
In addition, analysts expect its bottom line to deteriorate by more than 30% next year, thereby putting off potential growth investors.
Therefore, although Butterfly Network shares are down by more than 30% this year, the recent earnings beat does not signal a significant recovery. As a result, it could be still too risky to buy the stock.
Source – TradingView
Technically, Butterfly Network shares seem to have recently plummeted to complete a downward breakout from a descending channel formation. As a result, the stock has fallen to the oversold conditions of the 14-day RSI.
However, given the company’s steep valuation and the forecast earnings decline, investors could target extended pullbacks at about $6.00 or lower at $4.81, while $8.59 and $9.88 ate crucial resistance levels.
It may not be time to buy the BFLY stock
In summary, although Butterfly Network shares are down more than 60% this year, the healthcare equipment company’s stock still seems significantly overvalued.
Therefore, it may be best to monitor performances over the coming quarters before buying the stock.
The post Should you buy or sell Butterfly Network shares after smashing earnings estimates? appeared first on Invezz.
