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Biotech / Medical : Biosource International
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To: Robert T. Quasius who wrote (163)8/28/1997 3:26:00 PM
From: Joe Dancy   of 696
 
Can anyone tell me in five paragraphs or less why this stock is so undervalued and what the outlook is for the company. Ordered the annual report and 10K today and analyst reports.

Company was mentioned to me by one of my subscribers. I buy severely undervalued growth company to hold for a three to five year period for maximum capital gains. Here's what attracts me to BIOI:

Revenue growth have been nothing short of specatular - up 45% a year for the last five years and accelerating. It is easier for companies with fast growing revenues to increase earnings, all other details constant. Three analysts have a strong buy, and one a hold - for a buy consensus.

Insiders own a good but not oversized chunk - 12% - and this is a small cap company with a market cap of around $50 million. Price earnings based on the last four quarters is around 17 - and with a consensus 5 year eps growth rate of 35% the growth/PE ratio is a very very attractive 2.0.

For a small biotech company earnings and revenue growth have been relatively stable - no big slugs one quarter then famine for the next three. Price/book and price/sales look well below market also, and apparently has no or very little debt.

I read some of the press releases and I'm not sure I understand what the real expertise is here. Can anyone explain?

Will the revenue growth continue? Earnings growth?

Is the investor relations department that bad they can't get the story out? Or can management not shoot straight here, and has just been lucky or fast and loose with reality?

Best - Joe
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