They didn't exactly say that it was overpriced. MF thinks 31 times FCF is a decent price IF the analysts are right that EPS growth will be 30% annually for the next three years. That's a big if considering analysts have reduced TASR's EPS for 2017 recently. Funny how MF doesn't consider the PEG ratio an indicator of rich/cheap. At more than 3x PEG, TASR is expensive.
It's in two sectors: Defense and Healthcare. A gem is buried in their healthcare unit, but why invest when it is diluted by the defense unit?
Just because something saves money doesn't mean it will be used. I've supported that statement with an example before: MTWA (Google it for more information). It can save Medicare billions of dollars a year but it is not used. The medical system is bizarre. What other industry does not provide cost details before the service is rendered? Congress has to allow Medicare to negotiate pricing of subscription drugs (it can't now).
Insurance companies have been reimbursing for non-invasive MTWA for years (former medical code #93025), yet this diagnostic test for (a) detecting susceptibility to sudden cardiac arrest and (b) who really needs a defibrillator isn't used (it could save Medicare billions of dollars annually). The doctors are in charge and they vote for their pocketbook using far more expensive, and invasive, electrophysiology. As a patient, which test would you prefer to use, an invasive one or a non-invasive one? Too bad, you don't have a say in the matter. MTWA, the better, less costly alternative, is not used. The evidence-based medical doctrine is a joke.
With doctors calling the shots of which products to use they will vote for their pocketbook, so score one for epifix. That's why cardiologists and hospitals won't use non-invasive MTWA to determine susceptibility to sudden cardiac arrest. It only costs a few hundred dollars but they prefer using invasive electrophysiology that costs nearly $9,000 to generate far more income for themselves. MTWA was FDA approved in 2001, 15 years ago. Developed at MIT, NASA has used MTWA on astronauts. NASA does not use two-bit tests on people it sends into space. Google MTWA for more information. The better product doesn't necessarily win.
But if a person provides supporting evidence for their position, are they a basher if the position portrays the stock price in a negative light?
Has anyone noticed that 2015 EPS was $0.36 while the average estimate for 2016 is only $0.26 (that's down from 2015 folks; where's the growth?) and $0.49 for 2017? That compares to an average 2017 EPS estimate on analysts' day in 2013 of $1.10 (a decline of 55%). My TASR EPS estimate for 2016 exceeds the estimates of the Wall Street analysts, and my 2017 estimate matches the highest analyst estimate, and I still can't justify the current price given the slow EPS growth (16.7% annually between 2015 and 2017). TASR's PEG ratio exceeds 3x!
1) The extra $100M is not a given. Don't count your chickens before they are hatched. Government contracts can be canceled for the benefit of the buyer, which might occur with the LAPD contract if it is re-bid. And given the recognition and high visibility of no-bid contracts utilized, a law enforcement agency is bound to reevaluate their contract with TASR. 2) That $100M applies to future time periods rather than 2015 versus the $26M EBIT loss in 2015. You're still mixing apples and oranges. 3) There will be additional costs associated with those future sales (manufacturing, assembly, quality control, shipping, coordination, etc.). Not all of those sales go to the bottom line.
Mix up your time frames and you get fruit salad. You're just like Rick on the Nov. conference call, where he magically converted gross margins to operating margins, completely eliminating SG&A.
There is something odd when the LAPD has to use a Kern County process to buy product. The LAPD didn't have a no-bid process of its own before?
"Superficial" is appropriate for you. The $26M EBIT loss in the Axon unit was accompanied by Axon revenue of $35.5M, not $135M.
The trial compares Thoratec's 5 LPM pump with ABMD's 2.5 LPM pump, so the test is rigged for SJM's benefit. But ABMD's sales people can say they have a 5 LPM pump too and it's already FDA approved. As for cardiologists wanting the best for their patients, I sincerely doubt that when it impacts their pocketbook. If that were true, they would be using non-invasive Microvolt T-Wave Alternans (MTWA) to test for susceptibility to sudden cardiac arrest (SCA) rather than invasive, and far more expensive, electrophysiology (EP). MTWA costs but hundreds of dollars versus $9,000 for EP. Hospitals are like minded. MTWA was developed at MIT, has been used on astronauts, has a medical reimbursement code, and was FDA approved in 2001 (15 years ago). What are the cardiologists and hospitals waiting for? James Gandolfini, star of "The Sopranos," country singer Lynn Anderson, and singer Frank Sinatra, Jr., died from SCA. Their deaths may have been prevented. SCA kills more than 300,000 Americans annually (one every two minutes). Google MTWA for more information.
From TASR's Form 10-K at the SEC, Axon revenue was $10.4M in 2013, $18.9M in 2014, and $35.5M in 2015. Axon had YOY revenue growth of 82.5% in 2014 and 87,8% in 2015. Where are you getting "in excess of 100% a year'? Meanwhile, Axon's 2015 EBIT loss was $26.1M, or more than $6M a quarter. That's a 40.6% increase in loss versus 2014's results compared to the taser unit's EBIT growth at half that rate. The Axon losses increased throughout the year, meaning there was no turnaround in those losses during 2015. When will we see the bottom of the losses in the Axon unit?
The hospitals are to blame as well as cardiologists. Both prefer to use far-more-expensive, and invasive, electrophysiology (EP) for about $9,000, which requires a one- or two-day stay in the hospital to prevent infection at the incision. By contrast, MTWA, now owned by OSIS, is non-invasive and costs but hundreds of dollars with no hospital stay required. It is good enough to use on astronauts but not on other Americans. Congress has to allow Medicare to make the decision on whether to use EP or MTWA, Until then, the cardiologists and hospitals have a considerable conflict of interest to continue using EP. MtWA can also determine who really needs a defibrillator. Defibs cost $25,000 and $45,000 to implant them. A study by Columbia University of 170,000 ICDs revealed that one-third were unnecessary. With 150,000 defibs implanted annually, the savings could be $2,9 BILLION dollars in medical costs. MTWA received FDA approval in 2001, 15 years ago. It was developed at MIT. It's shameful that MTWA is not utilized.
Since May 2014, technology has advanced. FDA approved customized partial- and full-knee replacements are now available from ConforMIS.