The December retail sales report was a disaster, notes Landon Whaley, who recommends shorting the SP...
Emergent Targets Bioterror
06/02/2016 7:00 am EST
Bioterrorism and biowarfare are the threats that drive this company’s business; asserts growth stock specialist Mike Cintolo, editor of Cabot Top Ten Trader.
The number one product of Emergent BioSolutions (EBS) -- accounting for 82% of revenues is BioThrax, an anthraxvaccine. And its number one customer — by a long shot — is the US Center for Disease Control (CDC)
Its current BioThrax procurement contract with the CDC is scheduled to expire on September 30th, and there’s no follow-on contract in place yet. But the CDC has reaffirmed their intent to award a new contract, and the stock’s chart suggests that investors are not worried about that.
As to the company’s other efforts, a big one is the upcoming spinoff of Aptevo Therapeutics, which is focused on cancer research and treatments.
The cancer business accounted for 11% of revenues, but a much bigger payout may be in the cards when the spinoff is completed — possibly this summer.
The company’s other two efforts, still small but with strong niche potential, are Emergard, an auto-injector device selected by the US Department of Defense as a platform for nerve agent antidote delivery, and a skin lotion for removal and neutralization of chemical warfare agents, which has been approved in Israel.
Quarter-to-quarter trends here are not smooth, due to the ebbs and surges in the US government’s buying.
Still, the company’s first quarter results, released in May, were impressive. Revenues jumped 74% to $111 million, and earnings were $0.16 a share, up from a loss of $0.50 a year ago.
EBS came public in 2006 and has been trending higher since, but there have been three pullbacks of greater than 50% in that time, so this is not for the faint-hearted.
Still, the volatility seems to be abating; the latest big pullback, which occupied most of 2014, took the stock down “only” 32%. If you can survive the stock’s volatility, the long term looks bright here.
By Mike Cintolo, Editor of Cabot Top Ten Trader
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