Stocks’ Details
 

Mesoblast Limited

First Patients Dosed in Phase 2/3 Trial for COVID-19: Mesoblast Limited (ASX: MSB) is a biotechnology company in the area of adult stem cell technology. As on 11 May 2020, the market capitalization of the company stood at A$1.85 billion. The company has recently announced that COVID-19 infected patients have been dosed of Mesoblast’s allogeneic cellular medicine remestemcel-L in the United States with moderate to severe acute respiratory distress syndrome.

March Quarter Update: During the quarter ended 31 March 2020, revenue of the company witnessed a substantial increase of 99% on the pcp and stood at US$2.1 million. In the same time span, the company reported cash in hand of US$60.1 million. MSB continued to prepare for the potential approval and commercial launch of RYONCIL in the US, which resulted in the cash usage of US$19.9 million.


Quarterly Statement of Operating Cash Flows (Source: Company Reports)

Stock Performance: As per ASX, the stock of MSB gave a return of 67.8% on the YTD basis and a return of 87.47% in the past one month. During the quarter ended 31 December 2019, gross margin and EBITDA margin witnessed a substantial decline from the previous half. In the same time span, the company reported a strong balance sheet with Assets to Equity ratio of 1.38x, lower than the industry median of 1.53x. The stock of MSB was placed in a trading halt on 11 May 2020. The stock will remain in a trading halt until the earlier of the commencement of normal trading on 13 May 2020 or when the pending announcement is made to the market. The stock last traded at $3.44 per share.

Pro Medicus Limited

Decent Increase in Revenue and Strong Balance Sheet: Pro Medicus Limited (ASX: PME) is engaged in the development and supply of software and IT solutions to the Public and Private Health sectors. As on 11 May 2020, the market capitalization of the company stood at $2.78 billion. The company has announced an on market share buy-back of 34,062 shares for a consideration of $842,972.03. During 1H20, revenue of the company witnessed an increase of 15.7% to $29.3 million and a growth of 32.7% in profit after tax to $12.1 million. The company also reported a strong balance sheet with no debt and cash reserves of $38.8 million.


1H20 Financial Highlights (Source: Company Reports)

What to Expect: The company expects a forward revenue of over $195 million in 5 years and an upside in growth trajectory because of growth in client examination. The company is witnessing continued growth from partners, Duke, OSU and others. PME has a contained cost base and increasing margins because of an increasing footprint. 

Stock Recommendation: As per AX, the stock of PME gave a return of 20.05% on the YTD basis and a return of 19.25% in the past one month. The stock is currently trading on average trading levels and thus has a further potential for growth. During 1H20, net margin of the company witnessed a slight improvement over the previous half and stood at 41%, up from 40.3% in 2H19. In the same time span, ROE of the company went up to 23.7% from 22.2% in 2H19. Considering the trading levels, decent returns, positive long-term outlook and decent financial performance, we recommend a ‘Hold’ rating on the stock at the current market price of $26.58, down by 0.673% on 11 May 2020. 

Atomo Diagnostics Limited

Additional Order for COVID19 Test Devices: Atomo Diagnostics Limited (ASX: AT1) is engaged in the expansion of global sales and continued development of its rapid test device technologies. As on 11 May 2020, the market capitalization of the company stood at $241.26 million. The company has achieved an additional unscheduled purchase order from NG Biotech, SAS to supply 422,000 integrated blood test devices for the rapid blood based testing of antibodies produced in response to COVID19. The additional order totals to 947,200 devices, received between late March and mid-April.

Significant Increase in Revenue:  During the half year ended 31 December 2019, the company recorded a significant increase in sales to $937k, up from $64k in 1H19. This was driven by the acceleration of registrations and in-country rollout of HIV products by the AT1 HIV products distribution partners, and the launch in Europe of customer RDT products that utilize the Pascal device. This resulted in an increase in gross profit of the company to $393k, up from 18.95k in 1H19. 


Growth in Revenue (Source: Company Reports)

Growth Opportunities: The company is witnessing accelerated growth with a broad range of rapid test opportunities. It is focusing on commercializing COVID-19 rapid antibody tests globally and has signed agreements. AT1 has a proven technology for blood-based rapid test devices and has established a strong market position with sales of over 1.2 million devices.

Stock Recommendation: As per ASX, the stock of AT1 is trading very close to its 52-weeks’ low level of $0.365, proffering a decent opportunity to enter the market. During 1H20, gross margin of the company witnessed a substantial improvement over the previous half and stood at 42%, up from 16.3% in 2H19. In the same time span, EBITDA and net margin of the company also saw an improvement on the previous half. Considering the trading levels, established market position, and increasing production orders, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.410, down by 4.651% on 11 May 2020.  


Daily Comparative Chart (Source: Refinitiv, Thomson Reuters)

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