BIOSEARCH: Potential H&S despite good fundamentalsOn July 10, after issuing a warning that the firm would expect higher than usual profits, BIOS jumped >20% that friday. Then, once its quarterly earnings were released, it was clear the company had not tricked us: + 25.8% REVENUES OF 14.3 MILLION IN THE FIRST SEMESTER, +44.2% to 5.5 million euros in Plant extracts business line, probiotics business registered a growth of 47.4%, standing at 3.2 million euros, driven mainly by the Women’s Health segment. Net profit was up +501,7% in the first semester of 2020. EBITDA of €1,96 million (+92,8% Semester over Semester).
However, technical analysis suggests to short the company until 1.04 or even 0.95 level (and some other analysts from FX Street say 0.87). As it is usual in summer, the company is experiencing low volume levels so if volume starts increasing, BIOS' share price may go up easily as Reig Jofre or ROVI did. So, long-term trend is bullish up until 2018 maximums of 1.95-2€. August is bearish.
relatively high PER: (57*1.13)/1.04 = 62
Not higher than RJFE's PER = 77
ROVI's PER = 95
And lower than:
FAES FARMA PER = 21.53 (very undervalued in my opinion)
PHARMA MAR PER = 14 (unstable company, needs more history to determine its viability. it could certainly be a good investment due to its low PER, but remember first semester 2019 it experienced losses instead of profits)
These PERs here were calculated based on net profit from first semester 2020 only.
Biosearch
Biosearch: -37.8% EBITDA, +53.8% extract salesBiosearch is clearly improving its fundamental results but investors may not like that drop on EBITDA. That is why we could expect Biosearch go towards 0.50 Fib level at 0.876 and bounce back to 1.07 level, with the risk of losing 10% once the stock is bought at 0.876. So short the firm in the next 15 days, and long until you feel comfortable. It may also be a long-term investment due to the several patents the company is asking for.
