|Shares Out. (in M):||56||P/E||0||0|
|Market Cap (in $M):||220||P/FCF||0||0|
|Net Debt (in $M):||0||EBIT||0||0|
|Borrow Cost:||Available 0-15% cost|
Expectations are too high and stock has moved too far too soon without showing the market any revenue or cash flow growth.
|Subject||Re: Some Thoughts|
|Entry||05/08/2018 03:52 PM|
Thank you for the thoughtful response. In the interest of brevity, we are in agreement on the long term opportunity with Avid. In a nutshell, I simply feel 4x sales is a lot to pay at $4 for a company that is still going through its transition and there remain risks to the execution. I am ever hopeful there will be a more attractive entry point to get long the stock as the next couple quarters will still optically look bad before the revenue ramp begins.
|Subject||CDMO could double from here - ignore the recent move|
|Entry||07/01/2019 03:22 PM|
Avid had a big move on last week's earnings - but don't let this discourage you from the shares at these levels.
The Company has pivoted to become a full service CDMO for large molecule biologics.
They have over $30m in cash and no debt. Their pipeline is filling up nicely and they have stopped burning money.
Avid has capacity for at least $130m of revenue at their current California facilities.
A multiple of 4.5x Sales would be low in this sector - all of the M&A deals getting done are for much higher multiples:
Here are some deals going back to 2016:
- Dec 2016 Switzerland’s Lonza acquires Capsugel for $5.5b (16x EBITDA)
- May 2017 Thermo Fisher acquires Patheon for $7.2b (17x EBITDA)
- Sept 2017 Catalent acquires Cook Pharma for $950m (17x EBITDA)
- Dec 2017 CDMO Samsung Biologics completes third plant for $740m
- July 2018 Catalent buys Juniper for $122m (71x EBITDA)
- July 2018 Cambrex buys Halo for $425m (16x EBITDA)
- April 2019 Catalent buys Paragon for $1.2b (6x Sales)
This is highly sticky, highly regulated, highly repeat-able revenue.
Valuation - back of envelope
$130m x 4.5x = $585 Enterprise Value
add $32m cash
less ($42m Pref)
= $575m of equity value
/ 56m shares out
= $10.25 per share
Here are the next catalysts we see:
- Avid will seek to refinance the Pref with cheaper bank debt (would indicate confidence in EBITDA baked in the pipeline).
- Market notices that the going concern language has been removed from the financial statements.
- Continued M&A activity in the CDMO biologics space.
- Company names credible permanent President & CEO
|Subject||Huge backlog win|
|Entry||07/08/2019 09:43 AM|
Avid release today confirms the thesis that this capacity can get filled - in addition it proves that they are actively beating the competition.
thx fiverocks for walking us through the value here. We expect more wins like they announced today.