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BioTelemetry: Still Undervalued Despite Pandemic Headwinds

Jun. 08, 2020 6:06 PM ETKoninklijke Philips N.V. (PHG)6 Comments


  • BioTelemetry presents a strong investment case despite being in danger of finally breaking a cycle of 30+ consecutive quarters of top line revenue growth.
  • In fact, the reduction in sales caused by COVID-19 has caused analysts' forecasts to become too pessimistic, I believe.
  • BioTelemetry is a leader in the cardiac monitoring field with a strong range of devices and an IP protected, FDA-endorsed proprietary data analytics algorithm.
  • The company's strategic acquisitions are beginning to bear fruit and the lucrative diabetes market beckons.
  • My analysis suggests BioTelemetry is significantly undervalued and ought to be trading as high as $65. I remain bullish.
  • This idea was discussed in more depth with members of my private investing community, Haggerston BioHealth. Get started today »

Investment Thesis

BioTelemetry 5-year share price performance. Source: TradingView

BioTelemetry (NASDAQ:BEAT) stock has suffered worse than most from the effects of the coronavirus pandemic, falling by 47% in March from a 1-year peak of $54 to $28.5, but the stock has recovered well, despite management's warnings on lower-than-expected Q2 revenues and its withdrawal of FY20 guidance. The trading price at time of writing is $46.

I believe that the stock has further upside potential to realize and that the current price and market cap undervalue BioTelemetry - a medical technology company specializing in remote cardiac monitoring - as a business.

Although management may not be providing specific forward guidance, analysts have estimated that sales revenues in Q220 will come in at around $86m, representing a 23% annual, and 24% sequential decline. Full-year revenues have been estimated at ~$430m, or a 2.2% year-on-year decline, whilst estimates of 2021 revenues are significantly higher, at ~$529m - a 23% increase on 2020.

I broadly agree these estimates based on management's bullish comments about growth in the first 2 months of 2020 before coronavirus hit, causing significant disruption to the business, but have a suspicion they are still somewhat low given what the company can achieve in the remainder of this year and over the longer term.

Pre-coronavirus, BioTelemetry had forecast, and was witnessing double-digit growth in 2020 and a significant increase in EBITDA margin, hence I forecast that growth between 2019 - 2021 may be as high as 20%, and by plugging ~9% growth between 2021 and 2025 into a DCF model we arrive at a fair value price for BioTelemetry stock >$66 when EBITDA margin is increased to 34% as per management guidance. An optimistic scenario could even see the stock break $100 in the next 18 months.

Whilst this may be

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This article was written by

Edmund Ingham profile picture

Edmund Ingham is a biotech consultant. He has been covering biotech, healthcare, and pharma for over 5 years, and has put together detailed reports of over 1,000 companies. He leads the investing group Haggerston BioHealth.

The group is for both novice and experienced biotech investors. It provides catalysts to look out for and buy and sell ratings. It also provides product sales and forecasts for all the Big Pharmas, forecasting, integrated financial statements, discounted cash flow analysis and market by market analysis. Learn more.

Analyst’s Disclosure: I am/we are long DXCM, ABT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

Hi Edmund any thoughts on this still? Just keeps going nowhere. Only keeping it to sell repeated covered calls to slowly make up my losses
Edmund Ingham profile picture
I think they had a good quarter, beating expectations and have not had to make many redundancies. Geneva is still bedding in and the pandemic disruption came at a bad time from a growth perspective. They need a strong price catalyst or a bumper quarter which may be in the offing, plus they need to win over more physicians - there are still doubts around the use of technology in the space I suspect. Agree recent performance has been disappointing but all the ingredients seem to be there - I am planning another deep dive article shortly. Tks.
@Edmund Ingham Thanks Edmund. I might add some at $35 to further average out my losses
What a PoS this turned out to be for me. I sold half at $51, I should have sold all. What caused the near 10% plunge?
Edmund Ingham profile picture
looks like a fundraising: seekingalpha.com/... BioTel may have a rough set of Q2 earnings but long run still a promising company IMO
CWatsonSD profile picture
Use to have high hope for BEAT to become a faster grower but alas it is more slow and steady. Could be worse but I still believe in a solid future.
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