Progyny, Inc. (PGNY) | Daily Alert July 10
Progyny is basically an HMO of sorts, with plans that work for couples trying to conceive, a growing issue for both want-to-be parents (who are starting families later in life, which increases the odds of problems) and companies (who want a more productive workforce and not stressed-out employees missing time with unsuccessful techniques).
The solutions are popular (100% client retention!), and while it’s possible some big boy comes in and tries to compete, Progyny has such a big lead (nearly 200 clients) and has 800-plus fertility experts and 600 clinic locations (30% of which don’t even participate in carrier networks).
The stock was tossed around for a few months, but etched higher lows during the correction, and as the pressure came off during the past two weeks PGNY has zoomed straight up to new highs.
Importantly, shares can be a little thinly traded (we don’t advise placing overnight orders FYI), but we’re OK taking a half position (5% of the portfolio) and averaging up if all goes well. We’ll likely use a stop near 50 or so, give or take. BUY A HALF.
Michael Cintolo, Cabot Growth Investor, cabotwealth.com, 978-745-5532, June 3, 2021
*Maravai LifeSciences Holdings, Inc. (MRVI)
Maravai is a newly public, high-growth life sciences company that offers exposure to some of the highest growth areas of the industry, including cell and gene therapy, biologics drug manufacturing and mRNA therapeutics.
Select products, services and processes Maravai provides include reagents for DNA and RNA oligonucleotide synthesis, bioprocess impurity detection/analytics and viral clearance, protein labeling and detection reagents, and RNA synthesis and scale up.
Most relevant to the here and now, Maravai supplies a critical component of Pfizer (PFE) and BioNTech’s (BNTX) COVID-19 mRNA vaccine through its yield-enhancing CleanCap mRNA capping technology. It also provides a component for CureVac’s (CVAC) yet-to-be approved vaccine.
Capping is a key step in the synthesis of mRNA as it increases the stability of the mRNA molecule during production of therapeutics and vaccines. CleanCap is the market leading solution when it comes to efficiency, a key attribute given the importance of manufacturing vaccine at scale.
Rough estimates suggest Maravai earns around $0.28 per vaccine dose. Given that Pfizer and BioNTech had, as of the beginning of May, shipped 450 million doses, have signed agreements for over 1.8 billion doses in 2021, and are prepared to make over 3 billion doses in 2022, there remains a lot of potential revenue for Maravai from just this vaccine.
Beyond COVID-19, Maravai’s CleanCap technology has broad applications for other mRNA therapies, which have gained much wider acceptance due to their success fighting COVID-19.
After Q1 results came out in May, guidance jumped again, to a range of $680 million to $730 million. Consensus estimates currently sit at $710 million, implying 150% revenue growth. Adjusted EPS is seen up 238% to $1.15. Management should report Q2 results around the end of July.
The stock has since rallied as high as 45, then pulled back late last week to close at 42.7 on Friday. At this level it looks modestly extended and I wouldn’t rule out a pullback to the 50-day line (currently at 39.34) within the month of July. However, we can’t ignore the strength of the trend and given the attractiveness of the stock I recommend investors begin to average into a position rather than jumping in at one price.
Timothy Lutts, Cabot Stock of the Week, cabotwealth.com, 978-745-5532, June 28, 2021
*Bio-Techne Corporation (TECH)
Bio-Techne is meeting robust demand for instruments, reagents and proteins from developers of biologics drugs and of COVID-19 vaccines. With new product launches and acquisitions, the company is likely to see revenue growth of more than 15% for the remainder of FY21.
Based on the strong performance from 3Q21, we are raising our FY21 adjusted EPS estimate to $6.40 from $6.10. We are also raising our FY22 forecast to $7.40 from $7.00.
TECH is trading at 60-times our FY22 EPS estimate, well above the average forward P/E multiple of 35.0 for our coverage universe of life sciences stocks. However, we believe the premium is warranted given the company’s solid growth drivers, which include new research tools and COVID-19 test assays. We also see the company making tuck-in acquisitions to expand its product portfolio and geographic reach.
Jim Kelleher, CFA, Argus Weekly Staff Report, argusresearch.com, 212-425-7500, June 28, 2021
*Omega Healthcare Investors, Inc. (OHI)
Omega Healthcare Investors (OHI, $36.84, 7.3% yield) is also up for the year. It owns 950 properties spanning more than 95,000 beds, managed by roughly 70 different operators across 41 states and the United Kingdom.
During 2020, since Omega’s tenants got financial assistance from the government (Medicare and Medicaid), the company was able to avoid cutting its dividend.
Omega reports that more people are released from hospitals to nursing homes than any other type of care, including home care. So, its business is continuing to expand.
Mark Skousen & Jim Woods, Forecasts & Strategies, markskousen.com, Eagle Financial, 300 New Jersey Ave. NW, Suite 500, Washington, D.C. 20001, July 2021
*XP Inc. (XP)
XP Inc. is a leading technology-driven platform providing investment and financial services in Brazil. In its last reported quarter, XP reported a more than doubling of adjusted first-quarter profit as the company added about one million active customers in the first three months of 2021, a 47% jump, while assets under custody surged 96%. Adjusted net income rose 104% to the equivalent of $155.6 million.
This is an aggressive pick in a growth sector that is somewhat insulated from the political and economic turbulence in Brazil. I encourage you to begin a position if you have not already done so. BUY A HALF.
Nancy’s Note: Carl sold XP this morning as emerging market stocks are underperforming.
Carl Delfeld, Cabot Explorer, cabotwealth.com, 978-745-5532, June 1, 2021