iCAD (ICAD) is advancing 5% in early trading despite today's sharp downturn of the broader market. The company, whose products utilize AI to detect breast cancer, preannounced higher-than-expected fourth-quarter revenue this morning.

iCAD's Upbeat Preannouncement

The firm expects its Q4 revenue to come in at roughly $5.1 million to about $5.3 million, well above analysts' average estimate of $4.5 million. In Q3, the firm generated $4.2 million in sales.

Last quarter, iCAD's total annual recurring revenue jumped 11% versus the same period a year earlier to about $9.8 million. In Q3, it reported total annual recurring revenue of $9.3 million.

The company made 106 deals in Q4, up from 85 contracts in Q3.

A Potential Positive Catalyst

The company's Q4 results may have been boosted by the FDA's approval in November of the firm's ProFound Detection Version 4.0. According to CEO Dana Brown, the updated product "offers a 22% improvement in detecting challenging and aggressive cancers" versus the previous version and reduces the false positive rate by 18%. Further, unlike the previous offering, its AI model analyzes prior exams, Brown reported.

The Price Action of ICAD Stock

In the last month heading into today, the shares had climbed 24%, while they had surged 32% so far this year. They are closing in on their 52-week high of $2.65.

While we acknowledge the potential of ICAD, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ICAD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: The writer owns shares of ICAD but has no plans to trade them in the next 48 hours. This article is originally published at Insider Monkey.