VirtualScopics: Undervalued, Unconventional And Misunderstood Oncology Play With Significant Medium-Term Growth Potential
- The attractive relative valuation is due to a persistent lack of revenue growth/profitability and inherent lumpy results due to revenue recognition policies and project life cycle timing.
- Growth should ramp up due to the recent significant increase in bookings and awards, which should turn the previous accounting revenue headwind into a tailwind.
- The unique and quantitative approach to medical imaging should result in meaningful market share gains as the current qualitative and subjective approach is disrupted.
- The ongoing shift from Phase I to Phase II/III studies and greater penetration of the oncology market should result in larger awards, higher gross margins and a longer growth runway.
- The return to the core clinical trials business and lower SG&A run rate should reduce cash burn and preserve the high cash balance (48% of market cap; no debt).