More from Wesley on AOL reprinted below...great analysis:
Subject: Re: Misc Comments
Date: Wed, Feb 4, 1998 09:43 EST
From: Wesley0428
Message-id: <19980204144301.JAA06715@ladder03.news.aol.com>
A few people have been mentioning that they have been buying recently. FWIW I added 15K shares to my account last week at 5 3/4. My MSON holdings are now at an all time high.
Regarding sales to Lysonix, there is a "micro" version of the Lysonix 2000 which is presently undergoing sterility certification testing. A significant portion (about half I think) of the existing Lysonix backorder is for this device. Certification will almost certainly be achieved this Q and could generate a slug of incremental shipments to Lysonix in Q3.
Regarding the lawsuit, I think my actions say what I think of that.
Regarding the relationship with U.S. Surgical, overall I understand USS is very pleased with the product and is rolling it out faster than Misonix had originally hoped for. The product was designed to outperform the J&J product and I believe it does. The formal launch only occurred last week. It is a worldwide launch. The royalty income potential from USS Autosonix sales is significant. I estimate the ultrasonic scalpel market at $60M, but
there is no solid data available. I'm sure USS wants at least half that market. Furthermore, a large portion of this market is replacement probes. The installed base is dominated by J&J (Ultracission), but I'm told the Misonix designed USS probe is superior to the J & J probe and that the USS probe works fine with the J & J box. That means USS could try to sell replacement probes into the J&J installed base. That could create a huge immediate market
for USS probes and, yes, Misonix gets a % of each of those sales whether MSON manufactures those probes or not. The USS royalty stream, alone, could easily justify a $6 stock price IMHO.
No one, even MSON, knows if USS will move Autosonix manufacturing in-house to their newly acquired Vallylab facility. USS has never suggested such a move, but of course why would they. Actually there are 3 major components to the Autosonix, the generator, the transducer, and the "consumable" probe. The big $ are in the probe because they are consumable. Chances are good that Misonix will keep the manufacturing for the generator and transducer,
because there is technology specific to MSON which it would probably not be worthwhile for USS to reverse-engineer. Misonix is doing all they can to try to keep the probe manufacturing.
Regarding the core business, it is doing great, especially Mystaire. Backlogs are at record highs and things are continuing to look promising for the next two quarters and FY'99 (after 6/30).
There are 3 new products being explored. Two are medical. Neither medical product is related to MDA or USS although I believe both are ultrasound based. Both are for new indications, not replacements for existing MSON products. The other new product is targeted toward the food processing industry, and has significant potential. None of these products is fully designed. They could never come to market or, even if they do, they could fail to penetrate
the market. But rest assured that Misonix is not resting on its current product base to generate revenue growth in FY'99 and beyond.
Financial Estimates
I'm currently looking for $.18 for Q3. That converts to $.15 after tax vs. $.16 last year on an equivalent basis. I don't know how the Market would react to that. Flomenhaft's last estimate was for $.17 reported. It still would be a 33% increase in revenue and a 16% increase in pre-tax operating income. I'd be more concerned if the stock had not already taken such a big hit. At some point this stock should move to a reasonable P/E. I'm looking for
$12 by the Summer. Also, MSON's PR firm is putting together a presentation for a Roadshow, which should start sometime in March and that can't hurt.
|
