ProMetic Life Sciences (TSX:PLI) offers a truly compelling risk/reward scenario, says Paradigm Capital analyst Alan Ridgeway.
Last Thursday, ProMetic reported its Q2, 2014 results. The company posted revenue of $4.4-million, but delivered a net profit of $23.4-million due to the recognition of a gain on revaluation of the equity investment of its equity interest in recent pickup NantPro.
CEO Pierre Laurin struck an optimistic tone.
“The significant impact on our financial statements of the NantPro transaction is reflective of the underlying value residing within our plasma-derived therapeutics business, particularly given that this reflects only the IVIG market in the U.S. alone,” he said. “We anticipate even more value creation to take place in the coming months as a result of the ongoing development and advancement of our plasma products pipeline.”
Ridgeway says ProMetic’s Q2 revenue of $4.4-million was below his estimate of $8.3-million. He says the weakness was due to resin sales and service revenue that came in under his estimates. The analyst, however, believes a longer than expected lead time on orders has simply pushed most of these sales into 2015.
Ridgeway thinks there are several potential catalysts that could create value for ProMetic shareholders over the next six to twelve months. In particular, he thinks the beginning of clinical studies for AAT, IVIG and plasminogen over the next three quarters are key milestones.
In a research update to clients this morning, Ridgeway maintained his “Buy” rating on ProMetic Life Sciences, but raised his one-year target price on the stock from $2.80 to $2.90, implying a return of 125% at the time of publication.