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Bull Of The Day: Champions Oncology (CSBR)

Brian Bolan
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Champions Oncology (CSBR) is a Zacks Rank #1 (Strong Buy) and sports an "A" for the Zacks Style Score for Growth.  As the aggressive growth stock strategist for Zacks, you know that helped get this stock on my growth stock radar.  Once I dug into the stock a little, I really liked what I saw.  This Bull Of The Day article aims to share exactly what got me excited about this stock.

Description

Champions Oncology, Inc., formerly known as Champions Biotechnology, Inc., engages in the development of advanced technology solutions to personalize the development and use of oncology drugs. The Company's Tumorgraft Technology Platform is a novel approach to personalizing cancer care based upon the implantation of human tumors in immune deficient mice followed by propagation of the resulting engraftments. This technology can evaluate tumor sensitivity/resistance to various single, combination standard and novel chemotherapy agents. Champions Oncology, Inc. is based in Baltimore, Maryland.

Recent Earnings

The company reported earnings on September 13 after the close and beat the single analyst estimate of a penny by $0.04.  That translates to a positive earnings surprise of 400%.  

Sure small time biotech will here and there post profitability.  So that wasn't the thing that caught my eye.

The company noted that they see annual revenue growth in excess of 20%. Now that is another good number, but again, not something that gets more overly excited.

This next line is the thing that got me super excited.  The company stated that they have reached the inflection point at which a growing sales volume should consistently exceed costs and this produce operational profitability on a quarterly basis.

Profitability

Normally biotechs that are this small are running in the red for years.  The losses mount up and the goal of profitability is sometimes only that, a goal.

This is not the case for CSBR, which just posted positive EPS of $0.05 per share and looks to maintain those levels going forward.

The key idea here is that investors that only want to hold stocks that are profitable will find this stock on their radar screen.  Clearly, a lot have already found it, but the run could just be getting underway. The more investors find out about a stock like this, the more demand there will be for the shares.

There is a downside to this profitability that I must mention.  The fact that there are earnings means that we are going to see some sky high earnings multiples for a while.  Right now, I see an 81x forward number, but given that a this is such a rare commodity I don't want to punish the stock for doing the right thing.

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Estimate Revisions

To become a Zacks Rank #1 Strong Buy) a stock must see some positive estimate revisions.  CSBR has those increases in spades.  To show you what I look at in this you can go to the detailed estimates page on the Zacks site.  The magnitude section is pasted below:

The estimates for this quarter and next have each moved from $0.01 to $0.04.  That is a total of 6 cents and that moved is reflected in the 2018 annual number which moved from $0.04 to $0.17.

Next year the estimates have moved from $0.20 to $0.25 so there is some really strong implied earnings growth as well.

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Champions Oncology, Inc. Price and Consensus

Champions Oncology, Inc. Price and Consensus | Champions Oncology, Inc. Quote

 

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