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A $4 Biotech Stock With Strong Financials

A $4 Biotech Stock With Strong Financials

Avid Bioservices, Inc. (Nasdaq: CDMO) recently reported strong financial results for the third quarter of fiscal year (FY) 2019 ended January 31, 2019, and provided an update on its contract manufacturing operations, and other corporate highlights. The stock has traded up on the news.

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  • GlobeNewswire summarized the highlights since October 31, 2018:

    • Achieved revenue of $13.8 Million, an increase of 102% compared to prior year quarter
    • Signed project expansion orders with existing customers representing $23.8 million
    • Completed process validation campaign for future commercial production with other validations ongoing

    Roger Lias, Ph.D., president and chief executive officer, commented on the earnings report: “The third quarter was busy and productive as reflected by our strong financial results.

    Our process development group is increasingly busy, now contributing over 20% of revenues.  With respect to new projects, we continue to see growth in the number of RFPs received.

    We are increasingly recognized as an attractive service-provider within the biologics outsourcing market and continue to work diligently to close new business opportunities.

    Importantly, we continue to successfully expand our scopes of work with existing customers, and during the third quarter, we expanded multiple ongoing projects.  Since the beginning of fiscal 2019, project expansion orders from our current clients have increased by 68%, demonstrating the significant contribution that existing customers make to our business.”

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  • Looking to Future Growth

    Lias commented: “We are pleased to report that we have recently completed a process validation campaign for one of our clients and have others ongoing.  These validation campaigns precede commercial production.  Pending completion of pivotal clinical trials and regulatory approval, each of these validations is highly likely to result in future production in support of product launch.

    During the past 12 months we have significantly diversified our client base, thus reducing risk and building a pipeline of future manufacturing opportunities.

    We have built commercial and operational infrastructure to support growth, right-sized the organization, significantly cut costs, and increased capacity utilization resulting in improved margins.  As a result, we are firmly on-track towards profitability and positive EBITDA.”

    He continued: “Driving these achievements is the truly exceptional team at Avid Bioservices whose dedication and hard work have contributed to our successes to-date.  Together we continue to execute to-plan as we build a sustainably profitable and admired company and firmly establish Avid Bioservices as an acknowledged leader in the CDMO sector.”

    Avid Bioservices has underperformed the market so far this year, but it appears that things could be turning around for the company.

    CDMO daily chart

    CDMO should be considered a buy if momentum increases.

    Look for an entry at $4.34 with a price target of at least $6.16 based on the pattern in the chart.

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