Shares of cardiovascular medicine specialist Cardio Diagnostics (NASDAQ:CDIO) are skyrocketing on Tuesday following the announcement of a key deal. Specifically, Vizient has awarded Cardio Diagnostics an “Innovation Technology” contract for its artificial intelligence ( ) driven molecular heart disease tests. As of this writing, CDIO stock is up more than 45% on the news. Nevertheless, prospective investors should realize that significant challenges still lie ahead for the firm.
According to a press release, Cardio’s heart disease test identifies “objective epigenetic and genetic biomarkers in patients suspected to be at risk or who may have coronary heart disease.” With the aforementioned contract, Cardio’s footprint should expand noticeably. Per the release, Vizient’s customer base “encompasses over 60% of hospitals and 97% of academic medical centers in the United States.”
On top of that, the new agreement will enable Vizient provider customers to access Cardio’s tests at “negotiated pricing.” As a result, more patients will be able to enjoy the benefits of next-generation cardiovascular disease tests.
Effective on Nov. 1, Vizient is awarding the contract based on a recommendation from its council of hospital experts. Naturally, this high-level endorsement is providing a much-needed lifeline to CDIO stock. Still, shares of the company remain an extremely speculative venture.
CDIO Stock Is Intriguing, But Its Long-Term Viability Remains Murky
Understandably, enthusiasm is ringing high for Cardio Diagnostics on this news. “We are honored to receive this contract from Vizient, which will accelerate access to our novel heart disease tests that leverage AI and a precision medicine approach,” said CEO Meesha Dogan.
Underscoring the positive sentiment for CDIO stock on Tuesday is Vizient’s large customer base as well, which spans across academic medical centers, community hospitals, pediatric facilities and more. Combined, this customer base “represents more than $130 billion in annual purchasing volume,” per the release.
On paper, then, CDIO stock also enjoys a vast total addressable market. Specifically, Allied Market Research points out that the global cardiovascular diagnostic testing market reached a valuation of $6.88 billion in 2020. By 2030, this metric may hit $15.43 billion, representing a compound annual growth rate ( ) of 8.3%.
Still, while Cardio Diagnostics may sound appealing, CDIO stock is also wildly risky. Obviously, the first clue is in its price. At around 32 cents apiece, shares literally trade in penny stock territory. Even worse, since the beginning of the year (and including today’s gain), shares are down 70%. Finally, the company also went public via a reverse merger with a special purpose acquisition company (SPAC). Due to a variety of factors, many SPACs have underperformed badly after their business combinations — and CDIO stock is no exception.
Why It Matters
Despite the warning signs, Northland Securities analysts have rated CDIO stock as a “buy.” What’s more, their price target stands at $8 per share, implying a robust 2,400% upside potential. However, the firm did reiterate this assessment back on Sept. 7, 2023, when CDIO closed at 43 cents per share.
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On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.