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Biotech / Medical : CRLS - Chrysalis : Any followers ? Any comments ? -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (48)	5/25/1998 2:01:00 PM
From: Mr Bond	Read Replies (1) \| Respond to of 51

It's a tough call, Steve. I can see the stock continuing to go sideways round about the $2 mark until some good news comes along. Q2 results (out early Aug) are most likely negative again, at similar levels to Q1, given the poor current backlog and the bloated infrastructure, but that shouldn't send the stock down much further. On the other hand, news of new contracts isn't likely to raise the price much either - it takes time for the revenues to kick in, and this company needs to actually start delivering before anyone will show much interest. IBAH also racked up (albeit unspectacular) losses for a while before being taken over by Omnicare at a healthy 70%+ premium to its price pre-announcement. Enterprise Value is $26.7m, making EV/L12M Sales = 0.6x. That should be attracting the sharks. CRLS has only $10m cash, and if revenues don't start picking up soon, the co. will have to raise money just for working capital purposes. That fund raising will hurt at today's price. An auction looks increasingly likely if MDS doesn't make a sweet enough offer. The only problem for the other potential acquirers is dilution (consensus EPS for 98 is -0.54) and this sector is not known for dilutive acquisitions. I don't see the stock going much below $1.75, so any purchase now seems to have limited downside given the current trading multiple and the favourable conditions for CROs in general. Maybe it's not too late to enjoy the ride????