One of the most important variables growth investors consider when developing an investment strategy is the recommendations of analysts and how they think the stock will perform in the coming months. That said there are two companies that recently had their coverage initiated by analysts that potential investors should consider.
Prolor Biotech (PBTH) which closed trading on Wednesday at $4.88/share had its coverage initiated by Oppenheimer who initiated the stock with an Outperform rating and a $7.00/share price target. The Nes Ziona, Israel-based firm, is a development stage biopharmaceutical company, engages in the development of proprietary versions of already-approved therapeutic proteins. Its technology, Carboxyl Terminal Peptide technology could be attached to an array of existing therapeutic proteins, stabilizing the therapeutic protein in the bloodstream and extending its life span without additional toxicity or loss of desired biological activity.
I think there are two key long-term catalysts for PBTH going forward. The first catalyst is going to be the continued development its therapeutic proteins and more specifically the development of its Carboxyl Terminal Peptide technologies and how those technologies can apply to a larger portfolio of previously-approved proteins in the future. The second catalyst in terms of PBTH is going to be the company's total-debt to total-cash ratio and how that ratio outpaces some of the company's industry based counterparts. Over the last 12 months PBTH has managed to demonstrate a total debt to total cash ratio of 0.00, due largely in part to the fact the company hasn't had any debt over the last 12 months, whereas biotech companies such as Ariad Pharmaceuticals (ARIA) and Nektar Therapeutics (NKTR) carry total debt to total cash ratios of 0.045 and 0.527, respectively.
ABIOMED, Inc. (ABMD) which closed trading on Wednesday at $22.53/share had its coverage initiated by Bank of America who initiated the stock with an Underperform rating and a $21.00/share price target. The Danvers, Massachusetts-based firm provides medical devices in circulatory support and continuum of care in heart recovery to acute heart failure patients. The company's products are designed to enable the heart to rest, heal, and recover by enhancing blood flow and/or performing the pumping function of the heart. Its products consist of Impella 2.5 catheter, a percutaneous micro heart pump with an integrated motor and sensors for use in interventional cardiology; and Impella 5.0 catheter and Impella LD, which are percutaneous micro heart pumps with integrated motors and sensors for use primarily in the heart surgery suite.
I think the one of the key catalysts for long-term investors looking to establish a position in ABMD is going to be the company's profit margins, and how they outpace some of the competition within the healthcare sector, and more specifically how they outpace some the other medical device providers. Over the last 12 months ABMD has demonstrated a profit margin of 6.68% whereas direct competitor Teleflex, Inc. (TFX) has only managed to demonstrate a profit margin of -1.90%.
Potential investors looking to establish a position in either PBTH or ABMD should do so with a small to moderate position and add to that position as both companies look to grow as a result of their continued research & development and ultimately the development of multifaceted products in terms of protein technology and medical devices.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.