•Muscle Pharm: Shares Are Deeply Undervalued At Current Levels
MusclePharm (OTCQB:MSLP) is a fast growing sports nutrition company with expected sales of over $100 million for FY 2013 and a market cap of approximately $70 million. Based on my analysis below, I believe there is significant upside potential for the shares over the next 3 months as the company releases FY2014 guidance and updates on the progress on various initiatives that have taken in place in FY2013.
•The current share price does not reflect the fundamental improvements in the underlying business, which has transformed the company during FY 2013.
•There is a significant valuation overhang on the shares from the on-going SEC investigation and the pending NASDAQ uplisting, both of which I expect will be resolved within the next 3 months.
•Currently trading at around $8, the shares appear to be significantly undervalued. Based on conservative assumptions on growth and profitability I derive a fair value of around $14 per share.
•Recent insider purchases by MusclePharm management and the announcement of a share repurchase program further support this observation.
•The company's strategic development has been financed by a group of investors led by Phil Frost (CEO and Chairman of Opko Health (OPK)) who invested $2.5 million through a common share offering at $10.50 per share in August of this year. MusclePharm raised $12 million in February 2013 at $8 per share
He did disclose it, and that's how we all can figure that one out:
"Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OTCQB:MSLP over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article."