ADMA Biologics Inc.

ADMA Details

Robust Product Ramp Up Remains Key Positive: ADMA Biologics Inc. (NASDAQ: ADMA) operates as a biopharmaceutical company developing specialty plasma-derived biologics. ADMA has about six plasma collection centres in various stages of development. It plans to increase the count to 10 over the next three years.  Expansion of manufacturing capacity for its BIVIGAM plasma pool is underway. The company is expecting to realize the benefit by mid-2021. Its revenues improved in YTD Sep’20 on the back of commercial ramp-up of BIVIGAM and ASCENIV. But losses widened to $56.3 million owing to an increase in distribution costs and R&D spend. The company incurred substantial costs towards the development of MICRO-ELISA for the treatment of COVID-19.  It had a cash balance of $59.7 million as of Sep’20.

Financial Highlights Q3 FY20 (Source: Company Reports)

Outlook: ADMD is building-up inventory for anticipation of demand for its plasma products. The capacity addition is likely to lift the FY20 sales.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months 

Stock Recommendation: The stock yielded 1-month and 3-month returns of 20.33% and 3.30%, respectively. The stock is trading lower than the average of 52-week high price of $4.65 and 52-week low price of $1.45. The company is developing MICRO-ELISA for the treatment of COVID which may lift the revenues going forward. We have valued the stock using the EV/Sales multiple based illustrative relative valuation method and arrived at a target price, with an upside of low double-digit (in percentage terms). For the purpose, we have taken peers like Cytosorbents Corp (NASDAQ: CTSO), Adamis Pharmaceuticals Corp. (NASDAQ: ADMP), and Mesoblast Limited (NASDAQ: MESO). On technical analysis front, the stock has a resistance level of $2.57 and support level of $1.80. Given the strong revenue growth, pipeline products, and adequate cash balance, along with key risks, we recommend a “Speculative Buy” rating on the stock at the closing price of $2.190, down by 1.35% on December 23, 2020.

ADMA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Foresight Autonomous Holdings Ltd.

FRSX Details

Uncertain Revenues and Losses: Foresight Autonomous Holdings Ltd. (NADAQ: FRSX) designs and produces autonomous systems for vehicles, including crash prevention technology. The company received two orders from Israeli defense company Elbit Systems for QuadSight system. Its COVID-19 screening solutions received pilot testing from health maintenance organizations. Besides, the company received order from Knorr-Bremse Systeme für Schienenfahrzeuge GmbH for automotive vision systems.  It had reported losses during YTD Sep’20 as its products is in prototype stages and generates nil revenues.  

Financial Highlights Q3 FY20 (Source: Company Reports)

Outlook: The new partnership with Elbit Systems and FLIR Systems to bring revenue visibility going forward. Its cash balance of $9.4 million provides adequate coverage to fund operating expenses and R&D spend. Its agreement with Japanese companies for Rail Vision product to unlock revenue streams.

Stock Recommendation: FSRX is into R&D phase with products in pilot testing. It has nil revenues and is incurring sizeable R&D expenses. The company had funded the operating requirements through existing cash and equity offerings. The stock of the company is on-rally with 1-month returns of 329.10% and 3-month returns of 550.16%. On the technical analysis side, the stock has a resistance level of $5.774 and a support level of $1.90. The stock touched new 52-week high of $6.45 as on December 23, 2020. Considering its nil revenue generation, significant losses, and steep price movement, we suggest investors to “Avoid” the stock at the closing price of $5.75, up by 78.02% on December 23, 2020.

FSRX Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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