ThinkEquity’s Woodburn Rates Verenium (Nasdaq:VRNM) at BUY – $3 Price Target
Source: http://feedproxy.google.com/~r/smallcappulse/feed/~3/EnOzWOqw-Go/Posted on Thursday, May 14th, 2009 | In Market Commentary, Small & Micro Cap
May 13, 2009 ndash; Analyst Comments ndash; ThinkEquityrsquo;s David Woodburn commented on Verenium (Nasdaq:VRNM) this morning, rating the stock at BUY with a price target of $3 (the stock closed at $0.61 yesterday). He cited improving enzyme profitability. Verenium reported Q1 financial results on Monday.
Financial Results
Verenium reported Q1 revenues of $14.4 million, compared with $15.2 million for the same period last year and a net loss of $0.3 million, compared with a $23.1 million net loss last year.
Woodburnrsquo;s Takeaways
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Improved profitability in Specialty Enzyme business
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; British Petroleumrsquo;s upfront cash contributions serve as validation of Vereniumrsquo;s technology and commercial prospects
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; New government incentives should facilitates scale-up to commercial levels
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Product gross margin of 45.5%
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Reconfigured revenue and gross margin forecasts to account for Danisco agreement as well as boosts to production utilization and yield. FY09 revenue forecast declines to $65Mnbsp; from $90M but product GM is increased to 45.5% from 32%. FY09 EPS increases slightly to ($0.69).
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Price target of $3 based on net present value calculation of enzyme business at value of about $2.14 per share and applying a group EP/revenue multiple of potential ldquo;ownedrdquo; cellulosic ethanol revenues that results in about $0.53 per share.
middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Rates at BUY nbsp;
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