Raymond James analyst David Novak likes the quarterly results from BioSyent (BioSyent Stock Quote, Chart, News, Analysis, Financials: TSXV:RX) but the analyst continues to be hesitant on the stock, saying in an update to clients on Thursday that the company needs to show a clearer roadmap to a long-term growth runway. Founded in 1947 with its headquarters in Mississauga, BioSyent Inc. is a specialty pharmaceutical company focused on establishing and building out pharmaceutical brands in the Canadian market with an emerging international footprint. Novak’s latest report comes after BioSyent reported its second quarter financial results, which Novak noted were in-line on revenue but a beat on earnings. “The company's pharmaceutical business continues to rebound off of a significantly depressed comparator year due to the impact of COVID-19,” Novak said. “However, growth from launch products, including Tibella and Combogesic, continue to be impacted by reduced traffic through doctors offices, which have yet to rebound to pre-COVID levels, however, access has improved over the recent weeks.” With a resurgence in the company’s international business serving as a catalyst, BioSyent reported net revenue of $7.2 million in the quarter, matching the Raymond James estimate of $7.1 million. However, the Canadian pharmaceutical sales sector dominated the revenue mix at $6.5 million, good for a 20 per cent year-over-year increase and accounting for 90.3 per cent of the overall equation. This was followed by $400,000 in legacy business revenue for a 58 per cent year-over-year increase, with international sales accounting for the remainder. “While the company is showing encouraging signs of growth relative to the comparator quarter, longer-term portfolio growth could benefit from an increased cadence of business development activity, particularly considering the recent setbacks of a number of growth stage assets including the Agguetant System, Cysview and the Cardiovascular portfolio,” Novak said. “Nonetheless, RX is starting to show signs of offsetting these losses by recent launches of Tibella and Combogesic, particularly as the pandemic subsides, in addition to new FeraMAX formulations.” BioSyent experienced a beat in its EBITDA report, with its $2.6 million figure coming out as a 136 per cent year-over-year increase and ahead of the Raymond James estimate of $1.9 million. Meanwhile, net income was also better than expected at $1.9 million, coming out ahead of the Raymond James estimate of $1.4 million and marking a year-over-year increase of 182 peer cent. The company ended the quarter with $28.2 million in cash, cash equivalents and short-term investments. “Our Canadian pharmaceutical business continued its double-digit sales growth in the fourth quarter,” said René Goehrum, President and CEO of BioSyent in the company’s March 9 press release. “With growth contributed from across our product portfolio of established brands as well as launch brands, sales grew by 21 per cent in the Canadian pharmaceutical business amid the ongoing challenges of the COVID-19 pandemic in 2021.” “I look forward to reporting on our progress in 2022 towards our strategic objectives of generating sales growth, building our product portfolio, and delivering long-term value to our shareholders,” Goehrum added. With the release of the fourth quarter financials, Novak made some slight revisions to his financial projections. As the company finished 2021 with $29 million in revenue to secure year-over-year growth of 31.8 per cent, Novak forecasts another slight jump to $33 million in 2022, good for a year-over-year increase of 13.8 per cent. From a valuation perspective, Novak sees the company’s EV/Net Revenue multiple dropping from the reported 3.3x from 2020 to end 2021 at 2.6x, then drop to a projected 2.3x in 2023. Meanwhile, Novak also modified his EV/EBITDA multiple projections, as he forecasts a drop from the reported 13.5x from 2020 to a projected 9.1x in 2021, which he estimates will remain constant for 2022. Novak also modified a pair of key growth rate projections, as he now expects the company’s three-year sales CAGR to come in at 10 per cent (previously nine per cent) in 2022 before jumping to 16 per cent in 2023, while also expecting the company’s EPS CAGR to jump to an eight per cent growth in 2022 instead of a two per cent loss, with 13 per cent growth still in place for 2023. Overall, Novak sees optimism behind BioSyent, though there is still work to be done. “We continue to believe RX remains a proficiently managed company with a strong balance sheet,” Novak said. “However, with the loss of a number of growth opportunities in recent years, further business development to secure long term growth is needed.” BioSyent’s stock price has ascended to a return of 16.1 per cent over the last 12 months and a 2.5 per cent increase since the start of 2022. The stock closed at a 52-week high of $9.41/share on June 24 and dropped sharply afterward, but it has since rebounded after posting a 52-week low close of $6.81/share on October 27. With the update, Novak has maintained a “Market Perform 3” rating on BioSyent while raising his target price from $7.50/share to $8/share for a projected one-year return of negative 2.3 per cent.