The COVID-19 pandemic has revealed the structural limitations of the healthcare industry in the U.S., especially with respect to resource scarcity and overbearing costs. President Biden has signed two executive orders to expand Obama’s Affordable Care Act and Medicaid to deliver comprehensive subsidized healthcare coverage to more citizens. In addition, the biopharmaceutical industry is expected to maintain its growth trajectory for the better part of 2021 as the mass vaccination drive continues.
With the COVID infection rate falling in the United States, investors are gradually shifting their focus towards healthcare companies that don’t necessarily have products related to COVID-19 in their development pipelines or portfolios.
Global Cord Blood Corporation (CO) and BioDelivery International Sciences International, Inc. (BDSI) are examples of such companies. They are attracting investor attention given their unique operations and innovative approach to medicine development. We expect these relatively lesser-known companies, which are trading currently at less than $5, to grow significantly in the near future.
Global Cord Blood Corporation (CO)
Based in Hong Kong, CO provides umbilical cord blood testing, processing and storage services in China. The company stores cord blood units for its applications in evolving medical processing technologies and for cord blood transplants. As of March 2020, the company had five operating cord blood banks across China.
As the largest umbilical cord banking operator in China, CO has three existing cord banking licenses in three provinces in the country. On December 30, 2020, the National Health Commission of China announced that no new cord banking licenses will be sanctioned in 2021. This policy will allow CO to retain its position as the dominant cord blood banking operator in China, with multiple licenses and a broad geographical presence.
CO’s non-GAAP operating income has increased 5.5% year-over-year to $43.80 million for six months ended September 30, 2020. Its net income rose 15.4% from the same period last year to $38.90 million owing to a mark-to-market gains in the value of its equity security holdings and decreased operating expenses. Its EPS has increased 15.4% from its year-ago value to $0.32.
A consensus EPS estimate of $0.20 for the current year, ended December 31,2020, represents a 135.6% rise year-over-year, while the consensus revenue estimate of $152.96 million for fiscal 2020 represents a 37.3% improvement from the same period last year.
CO has gained more than 80% since hitting its 52-week low of $2.54 in May last year. The stock hit its 52-week high of $4.63 yesterday, declining slightly intraday to close the trading session at $4.62. Analysts expect CO to gain 237.1% in the near term to hit $15.
CO has an overall rating of B, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance. CO also has a B grade for Value, Stability, Sentiment and Quality.
BioDelivery Sciences International, Inc. (BDSI)
BDSI is a specialty pharmaceutical company that is engaged in the commercial development and international sale of a variety of pharmaceutical products for treatment of chronic diseases. The company uses patented BioErodible MucoAdhesive (BEMA) drug-delivery technology, which is a small erodible polymer film applied to the lining inside the cheek. BDSI has several U.S. FDA-approved products in the market that are delivered using BEMA technology.
On November 5, 2020, BDSI announced its plans to repurchase shares worth $25 million. The timing and volume of share repurchase hasn’t yet been decided on and is dependent on the market conditions, subject to board approval. This move should allow BDSI to strengthen its position in the market and streamline its capital allocation to boost its growth prospects.
BDSI’s revenues have increased 30% year-over-year to $39.40 million in the third quarter ended September 30, 2020. This can be attributed to a 31% increase in BELBUCA drug sales, and a 59% rise in Symproic drug sales. The company’s BELBUCA and Symproic prescription volumes have increased 25% and 18%, respectively, to hit all-time highs over this period. Its net income has risen 2550.6% from the same period last year to $9.38 million.
A consensus EPS estimate of $0.60 for the fourth quarter ended December 31, 2020 represents a 700% rise year-over-year. The consensus revenue estimate of $38.72 million for the about to be reported quarter represents a 22.4% rise from the same period last year.
BDSI has gained more than 50% since hitting its 52-week high of $2.85 in March last year to close yesterday’s trading session at $4.29. Analysts expect the stock to hit $8 in the near term, indicating a potential upside of 94.2%.
BDSI has an overall rating of B, which translates to a Buy in our proprietary POWR Ratings system. It has a B grade for Growth, Value, Sentiment and Quality.
The POWR Ratings are calculated by considering 118 different factors with the weighting of each optimized to improve overall performance.
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BDSI shares were trading at $4.37 per share on Wednesday morning, up $0.08 (+1.86%). Year-to-date, BDSI has gained 4.05%, versus a 4.24% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...
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