Date of Data Capture: 18/03/2020
Name: MEDICAL DEVELOPMENTS LTD (MVP)
Current Price: $4.76
Market Capitalisation: $324 M
Forecast EBITDA Growth: 54.96%
Yield Estimate: 0.81%
Consensus Price Target: $10.14
# Covering Analysts: 3
Discount at Current Price: 53%
Price Target Trend (3-Month): Up +41.23%
Signal Timeframe: Quarterly-Monthly-Daily
Trend Bias: Up-Down / Long-Short
Focus: Capital Growth
Set up Notes:
• MVP offers an unexpected entry opportunity here after pricing crashed 60% in 4 weeks due to Covid19 panic – but it still retains a favourable outlook with very strong forecast growth ahead.
• Performance has been strong with excellent general growth-boosting earnings up over 54% last year - this year growth is likely to be slightly softer - but impact from the pandemic should be limited, and analysts expect extremely strong growth in sales, earnings and profit out to 2022.
• Pricing shows a catastrophic fall from fresh all-time highs reached 4 weeks ago – the outcome of the stop-loss cascade gives an excellent discount with price targets still 100%+ higher.
? Support ($): 4.75, 4.50, 4.25, 4.00 & 3.75.
? Resistance ($): 5.00, 6.00, 7.00, 9.00 & 10.00.
Growth Focus: MEDICAL DEVELOPMENTS LTD (MVP)
The primary focus is capital gain - stocks are selected from the ASX Top 500 All Ordinaries Index.
With markets giving investors plenty of pain at the moment, we are taking a fresh look at one of our favourite biotech stocks; Medical Developments Ltd (MVP), as the maker of the Penthrox analgesic gets sharply sold off in the Covid19 panic - though stills carries excellent potential for continued global growth.
Medical Developments is a leading emergency medicine solutions company that manufactures and distributes pharmaceutical drugs along with medical and veterinary equipment. The company is best known for its well-regarded analgesia product Penthrox or the ‘Green Whistle’ which is non-opioid, non-addictive and inhaled to give strong and fast acting pain relief.
Based in Australia, the company is currently expanding aggressively into international markets, winning approval access to China and Russia towards to the end of 2019, causing significant share price strength. The company remains in expansion mode, and is currently progressing approvals in South Korea and the US, which should be a major opportunity for the company, with further progress expected this year for markets in Bosnia, Hungary, Greece, Malta, The Netherlands and Thailand.
Obviously the short-term impact of the Covid19 pandemic is causing the steep drop in pricing, but this may be restricted only to a very short timeframe. The company issued a specific limited-impact statement on its outlook and isn’t expecting any supply shortfall, is well-stocked and isn’t seeing any drop-off in demand. We should have been expecting a strong year this year, with 2019 reporting showing Australian sales up 18%, European sales up 35% and UK sales up 42% - and this strong growth trend was expected to continue out to 2022.
With pricing now beneath $5 again we should be starting to see the stock finding support as bargain hunters wake up to the fact the price of this premier growth stock has been cut in half, but it’s full potential remains. This is also seen reflected in the majority positive analyst sentiment and deep discount to target prices. We don’t want to let this disaster go to waste, and even though we are yet to see the bottom of this dip we are looking to begin buying here and follow into fresh strength.
We believe this current price crash is a rare opportunity to purchase a unique medical company that is rapidly expanding internationally and showing strong global growth – and at these prices we think an investment in MVP at these levels should have you feeling better soon.