Q2 2022 diluted shares 31,189,000
share price $37.92
market cap $1.183 billion
Q2 2022 cash & securities $931 million
market cap - cash & securities = $251.7 = market value of the operating business
FY 2022 core revenue forecast = $185 implies P/S = 1.4 for the core business (core excludes covid testing)
strong balance sheet
typically they are net income profitable and positive cash flow
key risk is can they scale the core business? (also have to absorb acquisitions which could pressure margins)
mostly reliable health care sector
ultimately a bet on management (founder ceo Ming Hsieh previously founded Cogent Systems)
I’ve owned them, not owned them, back to owning
Wow thanks mostlylong I need to look at them. That seems really cheap.
Let us know what you think. FLGT is known in these parts.
I’ve always liked them, but then got overly distracted with software stocks.
We have to parse out the core business from covid testing which adds a lot of noise but also adds a lot of cash. Their platform scaled very nicely with covid testing, but they did indicate on the Q2 2022 conference call to not expect that level of operating margin in the core business. Absorbing and scaling acquisitions, including a sales build-out and push will be some work for them.
Did some very quick reading on FLGT. Looks like 50% of their revenue comes from Covid testing. Also the Covid testing increased their margins. So they are about to have decreasing revenues with decreasing margins. Obviously why the stock price is getting punished.
Well, this turned out to be a mess. So much for management, at least in my eyes.
FLGT is acquiring a small pharma business that used to be owned together with FLGT’s diagnostic business. When FLGT diagnostic went public, they split the diagnostic business from the pharma business. Now with FLGT acquiring the pharma business, the two units will be combined again.
Thought that occurs to me: profitable diagnostic business shovels cash into fire pit of unproven drug discovery business.
They even say as much: “Through this acquisition, Fulgent Pharma will have access to commercial relationships across the oncology market as well as capital to fund research, development and, assuming the requisite regulatory approvals, commercialization…”
No, thank you.
My thoughts exactly after listening to the call…
…happened to be listening to the call as I typed that, a question was just asked by Credit Suisse analyst asking about the cash and capital needs of the Pharma business over the next 1-2 years and they said it shouldn’t be more than $15-16-17M/year for 2023 and 2024.
I guess I’ll continue holding to give what I consider a market disconnect with the value of the company time to play out as long as those Pharma expenses don’t start eating up their $1B cash pile faster than they say.