Retractable Technologies, Inc.

RVP Details

Retractable Technologies, Inc. (NYSE: RVP) is a manufacturer and marketer of VanishPoint and Patient Safe safety medical products and the EasyPoint needle. VanishPoint syringes, blood collection devices, and IV catheters are designed to reduce needlestick injuries and product reuse by retracting the needle directly from the patient, effectively limiting exposure to the infected needle. Patient Safe syringes are specially engineered to prevent the danger of bloodstream infections caused by contaminated catheter hubs. The EasyPoint is a retractable needle that can be used to provide injections with luer lock, luer slip, and prefilled syringes.

Latest News:

• Payment of Dividend: On December 29, 2021, RVP announced that it had declared USD 39,050 and USD 39,495.10 in dividends to Series II Class B and Series III Class B Convertible Preferred Stockholders. The quarterly dividend accrued at USD 1.00 per share per annum had been paid on January 24, 2022, to preferred shareholders of record on January 10, 2022.

Q3FY21 Results:

• Surge in Topline: The company witnessed a YoY growth of 34.20% in sales, net to USD 36.36 million in Q3FY21 (ended September 30, 2021) from USD 27.09 million in Q3FY20, owing to growth in the Syringes segment.
• Decline in Profitability: Net income for Q3FY21 decreased 41.28% YoY and stood at USD 6.46 million compared to USD 11.01 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents (including short-term investments) of USD 29.95 million and total debt of USD 2.17 million.

Key Risks:

• Supplier Concentration: In Q3FY21 and Q3FY20, purchases from the Chinese manufacturers accounted for 91.9% and 80.5% of RVP’s total purchases. As a result, delays in getting the requisite quantity or unfavourable charges from Chinese manufacturers may distort its output, jeopardizing its overall operational condition.
• Customer Concentration Risk: In Q3FY21 and Q3FY20, the US government accounted for 93.7% and 94.2% of net sales, respectively. According to RVP, the US government is expected to remain an important client until March 2022. Such reliance on specific clients for business could harm the company's long-term financial health.

Outlook:

• Capex Guidance: RVP has hired a construction company and an architect to help enlarge its current administrative offices. The expansion is expected to cost around USD 5.0 million and will be finished in H1FY22.

Stock Recommendation:

RVP's stock price has fallen 60.31% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 4.87 to USD 20.01.

Considering the significant correction in the stock price, strong topline performance, solid profitability margins, associated risks, and current valuation, we recommend a "Speculative Buy" rating on the stock at the current price of USD 4.945, down 2.27% as of February 10, 2022, at 03:35 PM ET.

Three-Year Technical Price Chart (as on February 10, 2022, at 03:35 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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