EchoIQ Ltd (ASX: EIQ) shares were on fire on Friday.
The ASX tech stock rocketed 30% to $1.62 after Pro Medicus Ltd (ASX: PME) announced a major investment in the company and a marketing agreement.
The market appears to see this investment as a stamp of approval from the medical imaging technology provider.
Pro Medicus' CEO, Dr Sam Hupert, commented:
In addition to providing financial backing, we are looking to offer our Visage 7 Cardiology customers the option of Echo IQ's technology. This is in line with our AI strategy of offering a curated suite of algorithms that will be a mixture of algorithms created by us, those created in conjunction with our clinical partners and 3rd party algorithms such as Echo-IQ.
Image source: Getty Images
Is it too late to buy this ASX tech stock?
The good news is that Bell Potter doesn't believe it is too late to buy this high-flying share. However, the near-term upside from here could be limited.
According to a note, the broker has initiated coverage on the cardiology-focused medical technology company's shares with a speculative buy rating and $1.65 price target. This is just a fraction higher than where its shares currently trade.
Bell Potter believes there is a major unmet need that the ASX tech stock could help with. It explains:
The major unmet need in this patient population are those currently asymptomatic (i.e. without obvious symptoms) with severe disease. The vast majority proceed to symptomatic disease within two years and become candidates for aortic value replacement. Recent clinical data has proven that early intervention drives a significant survival benefit.
The data suggest that the majority of these patients are not identified using current screening methods and fewer still receive treatment. Finally, this recent clinical data has been recognised by CMS which recently proposed an update to its National Coverage Determination to extend reimbursement for AS patients with asymptomatic disease.
Commenting on its speculative buy rating, Bell Potter adds:
We commence coverage with a Buy (Speculative) recommendation and valuation of $1.65. We expect EIQ expand rapidly over the short to medium term as healthcare operators and payers recognise the benefit of these diagnostic aides in helping to minimise the long term cost of heart failure to US healthcare.
Overall, this could make it one to watch in the near term.
