Should you Invest in this Healthcare amid Volatile Situation- CUV

Clinuvel Pharmaceuticals Limited

CUV Details

Recent Updates: Clinuvel Pharmaceuticals Limited (ASX: CUV) is engaged in developing drugs to treat a broad range of severe skin illnesses.

• Recently, the company announced that Philippe Wolgen, a director in the company has disposed 55,606 ordinary shares, for a consideration of $1,132,006.32.
• In another update, CUV expanded its melanocortin drug portfolio, and has progressed on its scaled manufacturing of adrenocorticotropic hormone (ACTH), under current Good Manufacturing Practice (cGMP). Additionally, the company aims to finalise the development and validation work required for a full regulatory record.

Sneak Peek at 1HFY22 Key Results:  The company’s cash receipts, and prudent control of expenditures aided the company to grow its commercial operations based on SCENESSE® for EPP patients. During the period, the company remained on track to progress well on its commercial operations in Europe, Israel and the USA and also maintained increased focus on the augmentation of research and development pursuits.

Financial Highlight; Analysis by Kalkine Group

Risk Analysis: The clinical trial process is designed to assess the safety and efficacy of a medical device before commercialisation. A failure to achieve the desired results may hamper the company’s financial performance. 

Outlook: CUV has built a strong cash position to support the planned organic growth and built a robust financial structure to respond to COVID-19 and any adverse changes in the economic environment. Further, with a robust commercial and operations excellence, higher European orders for SCENESSE® products and a leading biotechnology company, CUV remains well-placed for long-term growth.

Valuation Methodology: Price/Sales Multiple Based Relative Valuation (Illustrative) 

Source: Analysis by Kalkine Group 

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: The stock of the company has been corrected by ~57.54% in the past six months. Currently, the stock has a 52-week high and low level of $44.67 and $18.11, respectively. The stock has been valued using the price-to-sales multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at some discount its peers, considering increased costs, supply chain disruption risk, forex headwinds, and strict regulatory approval, etc. For that purpose, peers such as Starpharma Holdings Ltd (ASX: SPL), Telix Pharmaceuticals Ltd (ASX: TLX), and Opthea Limited (ASX: OPT) have been considered. Considering strong liquidity position, positive cash flow from operations, higher demand from its key product SCENESSE®, encouraging long-term outlook, current trading levels, and indicative upside in the valuation, we recommend a “Buy” rating on the stock at the closing market price of $18.38, down by ~0.22% as on 28 March 2022.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

CUV Daily Technical Chart, Data Source: REFINITIV 

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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