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Medical Imaging: A Boost for BIT
08/01/2003 12:00 am EST
"We believe companies that provide solutions to hospitals or services to the pharmaceutical industry will continue to see significant growth," says Ian Wyatt in The Growth Report. "Our latest recommendation, Bio-Imaging, is a growth play in a niche sector of medical imaging, by providing imaging management services to pharmaceutical companies.
"Bio-Imaging Technologies, Inc. (BIT ASE) was founded in 1990, and has become a leading provider of medical imaging management services that support the product development and regulatory approval process of pharmaceutical, biotechnology, and medical device companies. For example, the company assists drug companies that are conducting studies that require the evaluation of medical images and the submission of clinical data to regulatory reviewers such as the FDA and comparable European regulatory agencies. Bio-Imaging also offers education, training, and certification for medical equipment, facilities, and staff.
"The market for outsourced research and development services is growing as a result of consolidation of the pharmaceutical and biotechnology industries. Recent FDA actions to decrease the time of the regulatory submission and review process should benefit the company. As the FDA encourages and perhaps begins requiring digital submission of information for clinical trials, this should only increase the need for Bio-Imagings' services. Continued research and development of new drugs and medical devices should translate into a continually growing potential client base.
"Bio-Imaging has no publicly traded competitors, and remains the largest provider of services to this niche market. For the first quarter of 2003, the company reported a 20% increase in total revenues to $5.7 million. Net income for the quarter was $366,000 or 3 cents a share, 15% higher than the year ago quarter. The first quarter was the 11th consecutive quarter of profitability and sequential revenue growth. We believe the future is bright for Bio-Imaging, and that early investors will be well rewarded in the long term for placing their bets with this company. Bio-Imaging has yet to provide any formal guidance for 2003. However, we believe revenue and earnings growth of 25-30% is achievable. We believe in the next 12-months Bio-Imaging should trade at 3.5 to 4-times 2003 sales. As a result, we are initiating coverage of Bio-Imaging with a 12-month share price target of $9-$10."
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