Butterfly Network (BFLY) Surges 22.0%: Is This an Indication of Further Gains?

Butterfly Network, Inc. BFLY shares ended the last trading session 22% higher at $9.93. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 9.1% loss over the past four weeks.

Butterfly Network shares rose after Needham initiated coverage of the company with a Buy recommendation. The market is also upbeat about Butterfly Network and Merge Labs’ multi-year licensing agreement through Butterfly Embedded. 

This company is expected to post quarterly loss of $0.03 per share in its upcoming report, which represents a year-over-year change of +76.9%. Revenues are expected to be $28.09 million, up 30.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Butterfly Network, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on BFLY going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Butterfly Network belongs to the Zacks Medical Info Systems industry. Another stock from the same industry, iRhythm Holdings, Inc. IRTC, closed the last trading session 0.1% higher at $110.53. Over the past month, IRTC has returned -11.9%.

IRHYTHM HLDGS' consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.02. Compared to the company's year-ago EPS, this represents a change of +133.3%. IRHYTHM HLDGS currently boasts a Zacks Rank of #3 (Hold).

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This article originally published on Zacks Investment Research (zacks.com).

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