Aegis Evaluates Chinese Bio Firms
Aegis Capital Corporation today initiated coverage of four Chinese biotech and biomedical firms that are expected to perform well in the near future.
Aegis initiated a 15-month price target of $12 per share for TrovaGene (Nasdaq: TROV), which at the time of the report was only valued at $4.61 per share. TrovaGene is a molecular diagnostics company specializing in extracting genetic material from urine samples. Aegis pointed to the relative ease of urine samples as diagnostic measures, as opposed to more invasive procedures, as one of the contributing factors in their price target.
In addition, Aegis pointed out that the global molecular diagnostics market is worth about $7 billion, and continues to grow at a compound annual rate of between 15 and 20 percent. Aegis also found TrovaGene's integrated in-house operations and strategic partnerships to have major potential to propel the company forward over the next few years.
China Biologic Products Inc. (Nasdaq: CBPO) was given a 12-month price target of $20 per share by Aegis, with a stock price at the time of $15.11 per share. China Biologic Products specializes in the development of therapeutic agents from blood plasma, a delicate process that requires rigorous procedures and operates at high standards of quality control.
Aegis is optimistic about the company's future because it operates its own plasma collection stations in China, and has experienced significant growth over the past several years. The company has been consistently profitable since 2010, and its revenue has grown from $120 million in 2009 to over $150 million in 2011, according to Aegis' report.
This morning Aegis also initiated coverage of China Cord Blood Corp. (NYSE: CO), a company that collects and banks umbilical cord blood in the People's Republic of China.
Heavy near-term growth is expected for China Cord Blood Corp. due to the fact that it holds three of the seven cord blood banking licenses in China, with the Chinese government indicating that they are only planning to issue a few additional licenses in the next three years. This gives the company something of a free reign over its market, justifying Aegis' price target of $5 per share, compared to the company's share price this morning of just $2.66 per share.
All three of the aforementioned companies were rated “buy” due to their stock performance, market share, and anticipation of their ability to compete with rival companies. A fourth company that is also now being covered by Aegis, Sinovac Biotech Ltd. (Nasdaq: SVA), was initiated with a “hold”.
Sinovac is a vaccine producer with a current stock price of $2.52, while Aegis' 12-month price target for Sinovac was listed as $2.50. Aegis pointed to a sales downswing due to a weak influenza season, and the general volatility inherent in betting on a vaccine company when such infections commonly fluctuate in severity year-to-year.
Additionally, Aegis sees Sinovac's reinvestment in its R&D unit as a sign that the company may not show strong profitability in the near-term. The company also has several well-established competitors in China, which makes it difficult to ascertain whether the company will flourish or experience a decrease in value.
Latest Ratings for TROV
|Aug 2016||Cantor Fitzgerald||Upgrades||Hold||Buy|
|Apr 2016||Cantor Fitzgerald||Downgrades||Buy||Hold|
|Apr 2016||Leerink Swann||Downgrades||Outperform||Sector Perform|
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