Canadian Bioceutical is still undervalued, says Echelon Wealth Partners
A new partnership for Canadian Bioceutical (CSE:BCC) is being commended by Echelon Wealth Partners analyst Russell Stanley.
This morning, Canadian Bioceutical announced a joint venture with Israeli pharma company Panaxia that will see the pair partner on the sale of products such as sublingual tablets, slow release tablets, rectal suppositories and topical patches.
“Based on the traction Panaxia’s products are enjoying in New Mexico, we believe this joint venture has strong potential to become a material contributor to revenue and margin development,” said Beth Stavola, Canadian Bioceutical’s president of U.S. operations. “Not only will we address a relatively underserved segment of a rapidly growing market, we have no required capital expenditures, making this a very cost-effective way for us to expand product offerings to our patients.”
Stanley notes that this deal allows Canadian Bioceutical to expand its product suite with no Capex requirements.
“Panaxia is to provide the CAPEX to equip BCC’s facilities, including the construction of GMP micro-sites, and will provide the non-active ingredients and compounds for formulation and packaging, with the pre-mix excipients sent from Panaxia’s GMP production facility in Israel,” the analyst explains. “The resulting revenue is to be shared 50/50.”
In a research update to clients today, Stanley maintained his “Speculative Buy” rating and one-year price target of $0.65 on Canadian Bioceutical, implying a return of 76 per cent at the time of publication.
Stanley thinks Canadian Bioceutical will generate EBITDA of $4.8-million on revenue of $29.4-million in fiscal 2018. He expects those numbers will improve to EBITDA of $11.9-million on a topline of $47.9-million the following year.