Avid Bioservice's FY24 Shortfall Anticipated: Analyst Says Later Stage Backlog May Pay In Longer Run

Wednesday afternoon Avid Bioservices Inc CDMO reported Q4 revenue of $39.8 million, a 28% Y/Y, beating the consensus of $38.90 million.

The gross margin was 21%, consistent with the same period in the prior year.

Avid recorded a net loss of approximately $0.3 million for the fourth quarter of fiscal 2023, compared to a net income of $115.6 million in the same period of the previous year.

As of April 30, 2023, cash and cash equivalents were $38.5 million.

Guidance: Avid forecasts FY24 sales of $145 million-$165 million. Investors are reacting as the outlook is way below the consensus of $181.27 million.

Stephens reiterated its Overweight rating but lowered its price target to $20 from $24.

The analyst notes that the company called out recent later-stage (phase 3/PPQ) work, representing larger projects that take longer to convert into revenue. 

In FY2024, an air pocket is created by the combination of this factor and a decline in early-stage demand. As a result, our FY24/FY25 estimates are moving lower. 

Longer term, if these later-stage customers move to commercial, the analyst could argue this is a net positive. 

Noting the challenging near term, the analyst continues to take the long view, which could prove to be a compelling entry point. 

Price Action: CDMO shares are down 13.2% at $13.51 on the last check Thursday.