Growth Focus: Medical Developments International Ltd (MVP)

by Patrick Taylor




Date of Data Capture: 18/03/2020

Name: MEDICAL DEVELOPMENTS LTD (MVP)

Classification: Pharmaceuticals

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

Indicators:
Short-term: Positive-Neutral
Medium-term: Neutral-Negative
Long-term: Positive-Neutral

Recommendation: Buy

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.

Disclaimer

This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.