Hi Drr. John. I was doing some research today and came across TTOO. Do you see their technology as any threat to AXDX's methodology? Is is a 'better' mousetrap? Or is it a non-compete? Thanks in advance.....
Got a great report from http://thewolftrader.com/?s=TECH about $TECH. I did have to subscribe but it was worth the time. Thank you guys for the tip! "hhse" Making money trading stocks.
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TECH has been showing support at 112.86 and resistance at 122. The buy rating: 4.5, Target: 151.91 at 9trading.
This and that.... I don't know if Yahoo will be accepting&keeping this message, since my last attempts to answer LMP's Q were unsuccessful (message deleted for whatever reason). -Even though I try to have a large cash position, I could not help but double down my position in Tesaro (TSRO, ca 135 USD) again. While I was lucky enough to buy into Clovis (CLVS) just before the most recent 50% surge, the valuation gap between TSRO and CLVS has narrowed significantly, not only because of CLVS's surge, but also because of the erosion in TSRO's SP. TSRO, however, has 2 significant advantages over CLVS: 1) Niraparib works regardless of BRCA status. 2) almost more important is the fact that TSRO's patents expire between 2027-2034, while CLVS' patents expire in less than three years (2020, with the usual possibility of a 5y extension, which however is not guaranteed). What makes more sense: to buy the Bentley with 10+ years of easy cruising ahead of you, or to go for a Chevrolet with a 2 yr+ lifeline? -I have been mentioning BeiGene (BGNE, currently 70USD) several times in previous posts. Due to its stellar recent performance (Celgene deal, etc), BGNE, which already was a large biotech position of mine has become the largest biotech position (together with RDUS), just behind GILD. And Celgene (I recently took a stake at 117, now 131) proved once again to be a shrewd dealmaker. Gilead execs should take note.... -One stock which still is lower than when I mentioned it earlier on is Five Prime (FPRX, ca 29USD). It's EV is now ca 470mill USD (plus 380mill cash! = MV 830 mill), which is very cheap, considering its powerful R&D capabilities in immuno-oncoloy and in targeted cancer therapeutics. I have a decent position in FPRX. -It might be time to buy O&G again. I did not yet pull the trigger though, even though some of the valuations are as juicy as during the last downturn. -LMP, trying to answer our Q once again: AXDX is in the top five of my US- stocks. Overall my top holdings are Nestle > Mimedix > Fuchs Petrolub (a German, family run lubricant producer for machinery equipment of all sorts with excellent long term track record) > Roche > Gilead = Techne. regards DR. John
Yahoo Finance Insights
TECH reached a new Ten Year High at 118.63
Dr. John, there is a post of your from about mid February, in which you listed 3 promising 'high risk' bio-techs. ACRS, SYRS and LOXO. It appears they have all been up HUGE. Once again, you always manage to find diamonds in the rough, Dr. John.... As an aside, did you see Clovis(CLVS) got a 50% bounce up today?
This is a Bio-Techne Message Board which is never talked about. Dr. John, or any of you do you ever follow Bio-Techne or know about the Company?
X axis : Stocks Price Correlation Coefficient Y axis : Quantity of stocks Sep-2016 1,000 Day Parameter 2,830 NASDAQ Stocks Price Analysis This stock mode of correlation coefficient is 0.8 In other words, the correlation coefficient of the other stock
The trading setup for TECH looks very enticing. Not sure how awesome.stocks finds all these incredible trade ideas but im happy.
Hey DrrJohn - you ever look outside of the US? Do you think there's a future for Acrux Limited?
I don't hold but not much has to happen right for this to go up sharply I'd imagine.
LMP, I'll post my reply to your question here in a separate (Yahoo lives up to its reputation "making things worse is what we do best": since the mb have been "upgraded" one does not see anymore t one glance, which message has been posted most recently...)
As to your question concerning the valuation of Accelerate Diagnostics (AXDX, currently at 28 USD, MC ca 1.5 B USD): I don’t use DCF-spread sheets in my decisions to buy or sell shares in a certain company. I use an amalgam of quality/integrity of top management (and BOD), my perceived value of the intellectual property (including moat), balance sheet and market potential and growth prospects/profitability.
AXDX top execs have a excellent track report. The Pheno Systems is way ahead of the competition (even though competition is alive and kicking). AXDX’s balance sheet is fine. As to the market opportunity/growth potential: Speaking of the global market which AXDX is targeting, there are about 20’000 instruments installed, which means that AXDX is tapping into a market representing ca 2 billion instrument revenue, ie non-recurring revenue. The 3 large player in this market are BD/Becton Dickinson (which is a large long term holding of mine), Danaher (which is a medium large long term holding of mine) and Bio Mérieux. These are fine companies and they don’t sleep. However, we should not underestimate AXDX’s first mover advantage. There is a 5 year replacement cycle in those instruments. Once labs/hospitals have been convinced to use the Pheno System, they will most likely stick to it for some time. New entrants will have to show that they are significantly better than the Pheno System, which is much more difficult to prove, than what AXDX is doing now, namely showing that the Pheno System is superior to traditional methodology relying on naphalometry. Switching to recurring revenue: There are about14 millions tests done yearly on theses 20’000 instruments, representing a 2.5 Billion recurring revenue stream. Taken altogether, AXDX wants to take as much as it can of a this combined revenue. I cannot predict, how fast the Pheno System will be adopted. I guess that after some initial hesitancy there will be kind of a push for other hospitals/labs to follow the lead (quite similar to the Da Vinci story: Nowadays, hospitals MUST offer surgery by Da Vinci). Now to the valuation: Let's attribute AXDX a EV/sales multiple of 8-10 (which is generous, but not unusual in fast growing medtech companies). Let’s assume the total market is 2.5 Bill. consumables plus 400 mill instrument revenue (1/5 of the 2 Billion instrument market assuming a 5 y replacement cycle), ie roughly 3 Billion. 10% of this market is 300M, 15% 450mill 20% 600mill. Applying a 8-10x EV/R ratio this gives you an enterprise value (or market cap, assuming no debt) of 2.4-3B (10% market share), 3.6-4.5 B (15% market share) or 4.8-6Billion (20% market share). Assuming AXDX achieves this goal in 5 years and we buy AXDX today at 28 USD/share, we’ll look into a CAGR in stock price of 15%-30%, (ie a doubling to quadrupling of the stock price within 5y), good enough for me…
Wow Drr. John, you sure know how to pick them! AXDX never goes down. I got in about 4 weeks ago, and I'm not sure the stock has been down more than 2 days, that entire time! LOL! They had earnings yesterday. Wow! Am I ever impressed. You can just see how this technology is going to save hospitals, patients and society alot of money! AND, they hinted at some respiratory test(seems a little hush hush) they are developing that will produce results in something like 10 hours vs the current norm of 48 hours. My goodness! Would you be adding Drr. John, or hoping for a pull-back? It's hard to tell if the stock is getting ahead of itself. But, it is also hard to determine what kind of market cap would be appropriate for AXDX. As an aside, do you think this would be a decent time to pick up some cheap RDUS shares. I don't have any position, and even though I don't love the osteo space, it seems the market is discounting RDUS too much?
1st QUARTER THOUGHTS...
The year has been rather friendly up to now. Finally MDXG (ca 11.75 USD) is getting back the respect it deserves (I added another 5% when it went below 8 a couple of weeks ago). Pete& team continue to deliver as promised. To think of it, MDXG has become twice a large position as Techne (ca 100 USD), partly because I trimmed my TECH position during the years now and the a bit, but of course also because of MDXG’s better stock performance.
Investors are still in wait&see mood when it comes to Accelerate diagnostics (AXDX, ca 25USD). The share price hovers about 10% above where it was just prior to the FDA marketing authorization of the Pheno System. If 1Q sales are good (which I expect), I predict a significant upward move in AXDX’s share price. CEO Mehren indicated that the most difficult persons to convince are not the doctors or the hospital administration, but the Head of Laboratories. The Pheno System will be a success. It is not excluded that the Lab Chiefs need some more time to be convinced, (which would spell opportunity to load up more shares), even though I think ramp up will go nicely. I did not add to my holding, but migh do so after Q1 release. I was kind of relieved to see the much deserved doubling in TGTX' share price (now 10.3. EV 540Mill, still not expensive). There was so much negativism about the stock (many doubters are still out there), including BB and RA Capital selling share (at the wrong moment), that you needed to maintain your cool. When TGTX became my largest Biotech holding (at 14) I sold about 40% of my shares at a nice gain (between 12-13.5). I keep the remaining 60%, still a considerable holding.
GILD continues to lag, and I bought 10% more at about 66.5 (cheaper now at 65.9). Gilead WILL make an acquisition, and I still guess it will be Tesaro (TSRO ca 136 USD). Which leads us to TSRO: I sold some 20% at 175+, bought them back at ca 145 and added another 10% at the end of last week at ca 137. Yes, there is some competition (AZN, PFE/MDVN, CLVS), but TSRO has the broadest label and the best results. GILD will not buy a Ford such as CLVS, but usually sticks with the Bentleys.
I (as many others) did not expect a CR for Incyte’s/Lilly’s baricitinib (INCY ca 123 USD). The CR shaved about a combined 6.5 Billion USD from LLY and INCY market cap. (To compare: TSRO’s EV currently is 6.5B. A buyout will be at north of 8.5 B IMO). I did not trade any INCY shares, but I sold some 15-20% of Seattle Genetics (SGEN ca 65 USD) about at current prices.
As I have indicated before I have built quite a large position in Beigene (BGNE, ca 36.7USD), which did not do much since I last mentioned the stock. It is a long term holding, its pipeline is early and midstage, but very promising.
In my last post I mentioned three risky stocks Corvus (CRVS, then 14, now 9.7), Syros (SYRS, then 11, now 15) and Loxo (LOXO, then 45, now 47.5). I sold CRVS, definitively the most risky of the three, at a loss, after the disappointing results for its lead drug A2AR-antagonist surfaced. The still have some potential left, but I move on to more promising pastures….
...Such as Five Prime Therapeutics (FPRX, currenlty ca 33 USD, market cap of a bit over 900 m USD but with almost 50% of it cash, FPRX spots an EV of only 485 m USD. FPRX is a R&D powerhouse dedicated to immune-oncology, has already signed several deals, amongst others with BMY and has an albeit early, but very large and promising pipeline. It’s a long distance runner, not a sprinter, but the current low shares price is IMO an excellent possibility to build a position. (I started buying at higher prices and thus am >10% in the red, which however does not bother me. I build quite a large position in FPRX, larger than CCXI, a position which I trimmed by about 40%. CCXI is solid and all, but at some point I thought that my position in it might be somewhat too large, compared to other alternatives.
RDUS is still fighting with the doubters. Will abaloparatide experience baricitinib’s fate and end up with a –surprise!- CR-letter? I dunno, but –of course- don’t expect this to be the case (otherwise I’d sell m shares). I have a large position, mildly in the red, and a CR would be significant hit to the portfolio performance…
In the "non-biotech space", my three underperformers from last year, the healthcare data platform company Inovalon (INOV, currently 11.6 USD), waste recycling company Stericycle (SRCL (currently 86 USD) and avionics company Esterline (ESL currently 87.5 USD) all showed promising signs of a business turnaround, which I hope will continue to strengthen.
Barge operator Kirby (KEX, ca 70 USD), one of my top 5 holding is continuing it’s slow uphill move (with some O&G prices related mood swings), but will be an excellent long term investment.
Mining/O&G-workforce accommodation company Civeo (CVEO, ca 3.25 USD), finally surged >40% this year, and out of a loosing position came a winning one. I sold about 30% at current prices and continue to hold the rest for the long term. CVEO’s share price was >20, when it was was spun off Oil States International (OIS). I started to buy at 12, then at 6, then at 3 and then, “big again” at <1… In the end a profitable outcome…but is it worth the stress…?) Regards Dr John
Drr John, we are getting a very nice run on MDXG! Also AXDX having a very nice day as well. Both up almost 7%. I've been tracking many of your mentions from your last several posts. Most of them are doing very nicely! TGTX gave us a great bounce about a month ago! Hope all is well. And I look forward to your next visit to this board. I wonder if you might be buying more AXDX? GILD have been somewhat frustrating. But I guess patience.
Got a great report from http://yugestocks.com/?s=TECH about $TECH. I did have to subscribe but it was worth the time. Thank you guys for the tip! Day trading trading stocks. This is a story about four people named everybody
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