I think ORI's weakness now stems from the overall market weakness and the possibility of rising rates, as opposed to being a concern about their mortgage and credit card division. I added today because of 5%+ on the dividend yield , but I think we could see another leg lower.
Selloff in NEO is unjustified. Whether it's international events, the domestic economy, or the fear of rising interest rates, none of that will have a direct impact on NEO's growth.
The delay in the prostate test has been known since the NEO conference call. The 10-Q shouldn't have been news to whoever dumped their shares.
Even though it was delayed, it sounded very encouraging, with it being offered for free in the US and EU to doctors who were willing to provide NEO with their results. So if the test is performing well for these doctors, NEO won't have to educate them on its value. That will make the ramp up that much easier when the rollout occurs.
So the big question is how well is the test performing - and if it is a big success, how much cash will HDVY burn through before the rollout?
The stock is cheap by classic valuation ratios. But the estimate is for a .02 loss this quarter. Of course I hope they beat that, but I'll be more interested on guidance for the rest of the year. As long as they are cash flow positive, I'll probably hold. We'll soon find out.
Cramer was touting the stock earlier in the week. A lot of people say to fade him. I listened to the conference call. Overall it's very encouraging, but I think there's some skepticism over the casino project. I understand that since gambling is a competitive business. Nonetheless I took an initial position on the selloff. I think it's a good REIT to diversify away from my holdings of medical and office properties.
Given how weak the overall market is today, I wasn't expecting anything from NEO. But there seems to be some buying interest.
The irony of that is that there was a lot of institutional dumping when NEO was dropped from the Russell. I definitely think we're going over 6 but I don't have an opinion on whether or not we're going lower first.
I wasn't sure if the blogger was including the acquisition when he was giving his revenue estimates. Anyway, the company's guidance for 2014 revenue with Path Logic is 83.0-86.0 million. I think it could exceed 90 million in 2014, but I'll use their low end of 83. Using the fully diluted shares of 53.7 million shares and a price/revenue of 4X, that would make the fair value 6.18 today.
If revenue is higher than that, and I don't see how it won't be, then price target moves higher with it. At 86 million, 6.40 becomes the fair value. So if 6.40 is the fair value of a no (or slow) growth company, 8 becomes as real possibility. But I'd like to break free from the 5.00 area before I get too excited. We got close to falling into the 4's today. I thought buying would come in at 5.00, and it did, but we're still mired at 5.20. We may have to test 5 again.
I own a lot of shares and it doesn't affect me to have a down day. Listen to the conference call. If you have already done so, listen again. This company is hitting on all cylinders. They are in the right business and we have the right management team. I think this is as good of an opportunity (profitability plus fast growth) as I've seen in a speculation in a long time.
"Whatever it is that you use to value companies, 'it' doesn't change as much as the stock price." Yes, of course Russia, the Mideast, or "x" - they all affect the investment world and psychology. And after a big run up. profit taking can be a factor. But IMO if we see sub-$5.00, and we could, buy more.
There are so many things going on that you can't just plug some numbers into a spreadsheet and come up with an estimate. Their revised guidance for the full year 2014 assumes that there is no revenue growth from either division the rest of the year. So they show an estimate of 83-86 in revenue for 2014. I definitely think it will be over 90, even with nothing more from the NCCI billing issue.
I think there will be a favorable outcome from NCCI; a successful launch of NeoLABProstate; another acquisition; and a lot of new business. I think revenue is accelerating. So, not factoring in any revenue from an acquisition, I'll guess high for 2015: $130 million in revenue.
If Q3 2014 is flat compared to Q2 (per management guidance), or if NCCI doesn't get revised favorably, then I'm lowering that guess.
I listened to the conference call again. I don't know what digital pathology is, but they are rolling it out tests within weeks. And business from the deal with Covance is supposed to start accelerating. I agree with you, avramj, that the distribution of the prostate test is building awareness of it now - if it works as well as I hope, the full rollout of it will have a head start.
And they clearly state that they are becoming an international company. The prostate test is in an EU trial. And they have labs in China and Switzerland via their deal with Covance.
They called the Path Logic acquisition small, and said they are actively seeking others. I wonder if they are looking overseas yet. If they do a large deal, they won't be able to use existing funding like they did with Path Logic. I would expect a secondary, which is OK with me.
I expect a buyout, but not any time soon. If that's the intent, they'll let the business grow first. They've just hit the sweet spot of growth. A buyout won't happen at this stage.
I think some of the near term stock price estimates might have gotten ahead of themselves. I am not expecting double digits in 2014, but I won't complain if I'm wrong about that! This is a great investment. Whether it happens slow and methodically - or things develop quickly - we're going higher.
Good question, jetskers. I don't know the differences between the 2 tests and the market potential of each with competition. They do seem to overlap. But I'd like to hear someone like Dr Albitar answer what the advantages of each are.
But there doesn't have to be one and only test. When I was plugging numbers into a spreadsheet, I was assuming that NEO test would do (in annual tests) 5-10% of the number of biopsies performed today. And it would impact the share price even with only low levels of market penetration.
And I think an accurate, non-invasive test, whether it is there's or ours, will expand the market size greatly.
Unless the 4K test is superior, then the NEO will gain significant market share. And this is one thing I saw that won't be a plus for the 4Kscore test: "levels of these biomarkers are combined with a patient's age and digital rectal exam (DRE)..." A rectal exam isn't necessary with NeoLABProstate as far as I know.
Plus I am skeptical of the 4Kscore test using "age" as part of their algorithm. That requires a test?
NEO wants to be a one-stop shop, and offer a range of tests. If the prostate test can just be added to the battery of tests a doctor orders, then NEO will do well with it. And if NEO has a superior test, they can win business because of it. Time will tell.