Meridian Bioscience, Inc.

VIVO Details

Meridian Bioscience, Inc. (NASDAQ: VIVO) is a fully integrated life sciences company that develops, manufactures, and sells diagnostic testing systems and kits, primarily for gastrointestinal and respiratory infectious diseases, elevated blood lead levels, and bulk antigens, antibodies, and bioresearch reagents used by other diagnostic manufacturers and researchers. VIVO generates income through two divisions: Diagnostic and Life Sciences. As of October 25, 2021, VIVO's market capitalization stood at USD 806.38 million.

Latest News: VIVO announced the release of their new Air-Dryable Direct RNA/DNA qPCR Blood Mix on October 7, 2021. This new service complements the company's breakthrough range of sample-specific master mixes, which are designed to enable molecular diagnostic manufacturers to generate tests more quickly. In addition, VIVO also announced the release of two new Air-Dryable Master Mixes on September 9, 2021: Air-Dryable Direct DNA qPCR Stool and Air-Dryable Direct RNA/DNA qPCR Stool Mixes.

9MFY21 Results:

• Growth in Sales: The company increased 27.53% in net revenues to USD 241.69 million during 9MFY21 (ended June 30, 2021) compared to USD 189.51 million during 9MFY20 due to an increase in both diagnostic and life sciences segments.
• Surge in Bottomline: VIVO witnessed an increase in net earnings to USD 64.75 million during 9MFY21 vs. USD 39.69 million during 9MFY20.
• Strong Balance Sheet: As of June 30, 2021, the company had cash of USD 70.01 million with total debt of USD 50.00 million.

Key Risks:

• Customer Concentration Risk: VIVO's ten most significant clients in the Life Science segment accounted for 46%  and 43% of Life Science segment revenues and 24% and 27% of consolidated revenues in Q3FY21 and 9MFY21, respectively. As a result, a company's long-term financial health may be jeopardized if it places too much dependence on a small number of clients.
• Product Concentration Risk: COVID-19-related products represented approximately 45% and 60% of Life Science segment sales, and 23% and 37% of consolidated revenues, respectively, in Q3FY21 and 9MFY21. As a result, any change in the Covid-19 landscape due to increased immunization throughout the world might negatively influence the company's financial situation.

Outlook:

• Revenue Estimate: As of August 06, 2021, VIVO expects its FY21 revenues to be in the range of USD 308-314 million.
• Segment Estimate: It also forecasts its diagnostic business to produce between USD 128 - 130 million, while the Life Science section will contribute between USD 180 - 184 million.
• Operating Margin and EPS Estimate: VIVO anticipates a 30-31% adjusted operating margin in FY21, with Adjusted Net EPS on a Diluted Basis in the range of USD 1.61-1.67, assuming 44.1 million shares.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

VIVO Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

VIVO's stock price has declined by 18.34% in the past nine months and is currently trading in the lower band of the 52-week range of USD 15.45 to USD 30.65. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 48.42. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 20.31.

Considering the company's conservative capital structure, strong margins, medical innovations, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 18.70, up 0.54% as of October 25, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.