A new analyst covering ProMetic Life Sciences (TSX:PLI) at Paradigm Capital means a new angle, but analyst Rahul Sarugaser says he maintains the firm’s “positive bias” on the stock.
In a research update to clients today, analyst Rahul Sarugaser assumed Paradigm Capital’s coverage of ProMetic Life Sciences, placing the firm’s “Buy” rating and one-year price target of $4.25 under review.
The analyst warns investors to be patient with timelines.
“We take a conservative view of current asset development timelines, and maintain our positive bias,” says the analyst who explained how he looks at the sum-of-the-parts value of the company.
“As the success of each program is directly influenced by the outcome of the immediately preceding program, we calculate the value of 4050 as a sum of the conditional probabilities of each indication,” he says. “Furthermore, PLI estimates initiation of Phase 1 clinical trials of its pipeline molecules, 4547 and 4425; however, as they are still in the planning stages for Phase 1 trials, we attribute nominal value to these.”
Sarugaser says his eyes are squarely on two aspects of the company’s business.
“Modest revenue from PLI’s reagent (resin) and contract manufacturing business to date notwithstanding, the company’s plasma-derived protein and small molecule clinical programs are its primary value drivers, in our opinion,” he says.
Sarugaser thinks ProMetic will generate negative EBITDA of $113.5-million on revenue of $18.9-million in fiscal 2017. He expects these numbers will improve to positive EBITDA of $25.5-million on a topline of $189.1-million the following year.