HCW ups Avid Bioservices PT to $11 from $6


H.C. Wainwright raised its price target for Avid Bioservices (NASDAQ:CDMO) to $11 from $6, saying the company’s business development continues to ramp up and reap rewards. The stock closed at $7.17 on Sept. 10.

Avid is a contract development and manufacturing organization focused on development and cGMP manufacturing of biopharmaceutical products derived from mammalian cell culture.

In its July 31, 2018 first quarter report, the company reaffirmed its fiscal 2019 revenue guidance of $51-million to $55-million. Under the new ASC 606 accounting standard, the current backlog is $39-million, the majority of which Avid believes should be recognized in fiscal 2019, ending April 30, writes analyst Joseph Pantginis.

For comparative purposes from last quarter and before the accounting change, the backlog was $60-million. “These backlog numbers could be considered potentially conservative because the figures stated are for those projects that have been irrevocably committed and do not include the ‘trailing backlog’ of highly likely work to be done (e.g., if Phase 1 work is included in the backlog, Phase 2 work would likely be included in the trailing backlog due to high confidence levels in moving to that next step, and the customer staying with Avid),” he added.

Mr. Pantginis said that this “backlog growth is important as it represents a significant trigger point for expanding into ready and waiting facilities, which could support $200-million in additional revenue potential.”

Stephen Kilmer