Date of Data Capture: 16/11/2016
Name: BIONOMICS LTD (BNO)
Current Price: $0.38
Market Capitalisation: $188M
Forecast EBITDA Growth: 227%
Gross Yield: 0%
Consensus Price Target: $1.63
# Covering Analysts: 3
Discount at Current Price: 329%
Price Target Trend: Increasing Flat
Signal Time Frame: Quarterly-Daily
Trend Bias: Up-Flat Long-Short
Medium-term: Positive Neutral
Focus: Capital Growth
Set up Notes:
• BNO are just starting to move out of a long-term downtrend in place since early 2014, backed up by very strong fundamentals.
• Technically the stock looks very good also with strong multi-timeframe momentum building behind positive news flow.
• We have some overhead resistance above, clustered around 40-45c - but the excellent long-term correlation (and aggressive price targets) raises our sights to resistance targets of 55c, 65c and 85c above this.
• Any pullback from here will find structural support around 35c, 30c and 25c, show-casing a favourable risk/reward ratio.
Growth Focus: Bionomics Ltd (BNO)
Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.
We all go through down periods and patches where we feel like our value is underappreciated, but rather than avoid these situations we seek them out - they are precisely the kind of investment opportunities we look for. Bionomics Ltd (BNO) is just such a case where we believe the dark clouds are giving way to bluer skies and it is just a matter of time until they realise their full potential.
The company began operating in 1998 and are headquartered in Thebarton, SA and their business focus is developing novel therapies to treat cancer and nervous system disorders like anxiety and depression. Despite the huge markets and potential of this biopharmaceutical company their performance over the last few years has seen shareholders downcast and their share price cast down after their licensing deal with Ironwood Pharmaceuticals flopped in 2014.
Things have been on the rise since then as they self-progressed development in this same therapeutic through trials and have recently shown excellent results (outperforming a major market player with no significant side-effects and lower dosage) and seem to be on the cusp of emerging from their lows. They have been banging the drum in the US recently and we wait to see what my arise from these stirrings.
This adds to their already impressive results regarding their vascular disrupting cancer therapy seen as having good potential to extend checkpoint inhibition and indicates huge scope and potential. Merck is the first big international partner on board but with strong results we would be surprised if there weren’t more deals in the pipeline as they look to partner out for this next stage of growth.
Their price targets are also starting to jump ahead, now sitting at $1.63 and currently showing a discount of over 300% to aggregate estimates (the highest target recently rose to $2.60) and have good growth forecasts to back them up. A new trial has begun for application into treating PTSD (Post Traumatic Stress Disorder) which could add yet another string to their already heavy bow.
The price history reflects events closely but doesn’t really show much more than the normal evolution of a promising biotech company progressing through its development, things go slowly at first and then tend to speed up on positive results and price momentum. We believe we have that here with our long-term signals converging to the positive following the recent results driven surge in September.
The charismatic CEO of BNO described their recent results as “Kick-arse” on live TV and she was right, they are – and the price reacted accordingly. The stock doubled from 25c to 50c before pulling back towards support at 35c, which is just below where we find them now. The recent pullback should be a good buying opportunity and if you like growth stories that aim to reward both patients and patience then this is the one for you for you.