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Biotech / Medical : Biosource International -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (479)	5/10/1998 8:37:00 PM
From: Joe Dancy	Read Replies (1) \| Respond to of 696

Mike: I think I misstated myself - I understood that the revenues would be up 10-15% each quarter from year earlier levels, so the annual increase would be 10-15% above year earlier levels. If I left the impression the 10% would compound every quarter so that the annual increase is 33% (or whatever it works out to) I apologize. All I know is that management said year to year revenue comparisions should look much better here on out and I typed most of that report off of memory. I don't have a tape of the meeting so cannot recheck exactly what was said. Further, I went back to my notes and management said the revenue increases would be 15-20% increases quarter over quarter, so I not only was ambiguous but understated the growth estimates given by management. So much for my memory. Here is my final report, off my notes, that I will send out next week: Joe ********* BIOI held their first quarter earnings conference call on 4/23/98. Revenues were down 3% from year ago levels. Earnings per share were $0.10 after a $0.02 charge for expenses to move the European headquarters, versus $0.10 a year earlier. Analysts expected $0.06 for the quarter, so the company exceeded expectations. While revenue was down compared to year earlier levels part of that decrease was expected. Around $190,000 in revenues was lost to business that was not expected to remain with BIOI after an acquisition, and sales in Japan the first quarter of last year were exceptionally strong and were not expected to continue. Going forward revenue growth should look much better, with new products already introduced expected to start to push revenues up 15-20% a quarter over year earlier levels. New products will also be introduced that have been developed - products that management thinks will be in high demand - that will help increase revenues in the last two quarters of the year. The company bought back $2.5 million in stock last quarter, and will continue the program in the current quarter. One analyst participating in the conference call estimated with the buyback the earnings that we will be looking at will be around $0.53 a share at the end of the year -when you take the average number of shares outstanding over the year the diluted number will be lower. Compared to competitors in this sector, management thinks that BIOI is selling at about one-half of where it should considering growth and price earnings valuation. One competitor has a price to earnings ratio of 130. The company will continue to look at potential acquisitions, but only if they make economic sense. The company will not adopt a growth at any price philosophy. LONE STAR COMMENTS ON CONFERENCE CALL We agree with management that this company is selling at one-half of where it should be considering the growth potential, and the share buyback should help the stock price. The company has bought back about one-half the 1.2 million shares authorized for repurchase. The new BIOI financial officer from Amgen was not mentioned, but he will be a valuable asset since one-half BIOI's sales come from international sources. From what management said products should drive revenue growth for the rest of the year - which along with the share buyback should boost earnings. We also like this company based on valuation. Based on the consensus earnings estimates for the fiscal year 1998 the forward price-earnings ratio is 16.1. With an estimated five year earnings growth rate of 30.0% annually, BIO has a price-to-book ratio of 1.9 -and a low debt level. The company is also a microcap - capitalization is around $55 million -which makes it easy for institutions to overlook.