Growing demand for weight-loss solutions has catapulted pharmaceutical firms like Eli Lilly (LLY) and Novo Nordisk (NVO) into the spotlight, with their drugs Ozempic, Mounjaro, Zepbound and Wegovy, becoming household names.
A lesser-known player, Allurion Technologies (ALUR), is carving a niche with its innovative solutions. The Massachusetts-based medical technology firm plans to test its gastric balloon-based Allurion Program alongside GLP-1 agonists, aiming to enhance muscle retention during weight loss.
Following this announcement, its stock more than doubled on Jan. 24, signaling market optimism that its approach could challenge industry giants Novo Nordisk and Eli Lilly, ushering in a new contender in the weight-loss arena. Despite this meteoric rise, analysts project a triple-digit upside, making this under-the-radar stock worth exploring further.
About Allurion Stock
Allurion Technologies (ALUR) aims to end obesity through innovation. Its flagship Allurion Program features a swallowable, procedure-free intragastric balloon designed to aid weight loss. Coupled with AI-powered remote monitoring, a behavior change program, secure messaging, and telehealth via the Allurion Virtual Care Suite, the company offers a comprehensive weight-loss solution. Though modestly valued at $17.75 million, Allurion’s tech-driven approach paints a picture of MedTech disrupting traditional methods and reshaping lives.
ALUR stock has tumbled 93% over the past 52 weeks, hitting rock bottom at $2.37 on Jan. 17. But just days later, shares of Allurion staged an incredible comeback, soaring 133.8% in five days, and over 134% on Jan. 24 alone, driven by the announcement to combine its weight-loss technology with an obesity drug, a move that reignited investor optimism and nearly doubled the stock overnight.
From a valuation standpoint, ALUR stock is priced at 0.41 times sales, significantly cheaper than its sector rivals.
Allurion Dips Despite Q3 Earnings Beat
Allurion Technologies’ Q3 earnings on Nov. 13 showed mixed results. Revenue plunged 70.5% year over year to $5.4 million, falling short of Wall Street’s expectations. The decline stemmed from de-stocking, macroeconomic pressures, a temporary sales suspension in France due to a product recall, and tighter credit risk management. Unsurprisingly, the stock took a hit, tumbling 26.3% post-earnings and another 37% in the subsequent two trading sessions.
Yet, amid these hurdles, glimmers of resilience emerged. AI product revenue from the Virtual Care Suite (VCS) soared 82% as U.S. patients began pairing Allurion’s solutions with GLP-1 therapies. Procedure volumes rebounded strongly in regions like the Middle East and Latin America, where macro headwinds had eased.
Losses also narrowed significantly. The net loss shrank to $9 million or $0.14 per share) from $21.6 million or $0.54 per share a year earlier, surpassing analyst estimates marginally. Operational losses improved, too, dropping from $26.2 million in the year-ago quarter to $12.3 million, aided by reduced bad debts and cost-cutting measures.
Management expressed optimism about resuming sales in France following a successful remediation plan. Meanwhile, plans to expand their AI portfolio, including testing Coach Iris, its AI coach, promise future growth.
Alongside the challenges of falling revenue, the company updated its full-year 2024 revenue guidance to a range between $30 million and $35 million, closely aligning with analyst expectations of $32.07 million. Despite flat year-over-year procedure volume growth, Allurion’s leadership is planning to slash operating expenses by 50% in 2025.
Losses, which have long shadowed the company, are expected to narrow significantly. Analysts forecast a dramatic 84.4% year-over-year reduction in losses to $10.09 per share in fiscal 2024, followed by a further 27.1% improvement to $7.36 per share loss in 2025.
Game-Changing Weight Loss Tech
Allurion Technologies sent ripples through the weight-loss market last week, driven by an announcement that could redefine obesity care. The company plans to test its innovative gastric balloon technology alongside GLP-1 drugs, a groundbreaking approach that has the potential to outshine industry giants like Novo Nordisk and Eli Lilly.
Allurion’s gastric balloon, a swallowable device that inflates to restrict stomach capacity, has already shown promise. Unlike GLP-1 drugs, which mimic hormones to boost satiety but often lead to muscle loss, the Allurion Balloon has achieved remarkable results. Studies reveal patients losing up to 15.7% of their weight without sacrificing muscle mass, and in some cases, even gaining lean body mass. Now, Allurion aims to amplify these benefits by combining its technology with GLP-1 therapies like Wegovy and Zepbound.
CEO Dr. Shantanu Gaur calls this combination a potential “gold standard” in obesity care. The company’s forthcoming study will evaluate whether this regimen can help patients not only shed pounds but also improve overall body composition, addressing a critical gap left by other weight-loss methods.
What Do Analysts Expect for Allurion Stock?
Despite ALUR’s struggles, analysts remain bullish on the weight-loss stock, with ALUR having a "Strong Buy" rating overall. With four analysts tracking it, three recommend a "Strong Buy" while one stays cautious with a "Hold." This consensus points to optimism, hinting that the company’s potential might soon outweigh its current underperformance.
The average price target of $28.67 suggests an additional upside potential of about 427% from current prices. However, the Street-high target of $50 implies the MedTech stock could rally as much as 820%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.