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Jefferies Raises OraSure Technologies Price Target

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December 31, 2014 9:08 am
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Jefferies raised its price target on OraSure Technologies, Inc. (NASDAQ: OSUR) from $10 to $12 and maintained a Buy rating.

Analyst Brandon Couillard noted that “Nielsen's monthly data for OSUR's OTC HIV test indicates retail unit volume sell-through increased 6 percent sequentially in the latest period (four-weeks ending Dec. 20), reflecting an encouraging reversal from last month (-9 percent in Nov.), despite absorbing a likely headwind from the timing of Thanksgiving & lack of media support.”

Couillard expected “domestic OTC HIV test volumes to remain tepid near term, the latest experience adds confidence to our 2015 revenue forecast for the product (-6 percent). Separately, we note that our model does not factor any contribution from a potential OUS
launch of the OTC HIV test, which could gain CE mark approval in early-2015.”

The analyst note concluded that “heading into 2015, OSUR remains one of our favorite small-cap growth ideas & we view multiple expansion as justified, given the prospects of an accelerating product revenue growth trajectory (+9 percent vs. flat in 2014E) and multiple discrete EBIT tailwinds (~$15M / +$0.25 impact), which should drive a meaningful profitability/cash flow infection next year.”

The $12 price target represented a 10-year horizon in the firm’s DCF model & implied an EV of 4.1x 2016E revenue.

OraSure Technologies closed Tuesday at $10.17, down 0.97 percent.

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