Tuck:
I don't like MCLS *at the moment* strictly from an investment point of view. They are still operationally combining disparate acquisitions, they are moving into, staffing and equipping a very large brand spanking new laboratory, they have a big slug of LT debt that is not going to be repaid from earnings in (at least) the next five years (meaning it will be repaid from a follow-on at maybe not very good prices), they continue to add to their fixed costs thereby pushing break even out to a point I can not see. And the financial model seems to be based on contract/services revenues, which if not now may in the future be sent out for competitive bidding. Even if there are royalties, can you imagine how conditioned, tiny and speculative they would be?
I know nothing about the company's competitive edge, or what one could learn from a conference call or analyst report, or even what a person would know who in fact knows either their fine work or the industry. True, $2/share sounds cheap; but many services (engineering companies, for example) companies when sold go for as little as 1.5 - 3x sales. I could see a sophisticated outfit like this fetching more, but not until they have a totally entrenched business with employees likely to stay with the new company (which, usually means that much of what would be the purchase price goes instead into the PhDs' pockets in form of retention bonuses--as well it should).
So, it is just not my investment cup of tea. Of course, after my 15 minute review of the 10K, I am most obviously NOT qualified to opine. Yet ignorance hasn't stopped me before. <g>
I did, however, like the fact they have resolved 40 protein crystals. And if they own those structures 100% and were to announce even one out-licensing, I'll be back. Back too late, I'm sure, but I'm used to that.
Wilder |
