Retractable Technologies, Inc.

RVP Details

Retractable Technologies, Inc. (NYSE: RVP) is a developer and marketer of VanishPoint and Patient Safe safety medical products and the EasyPoint needle. By retracting the needle immediately from the patient and successfully reducing exposure to the contaminated needle, VanishPoint syringes, blood collection devices, and IV catheters are meant to prevent needlestick injuries and product reuse. Patient Safe syringes are designed to eliminate the risk of bloodstream infections from contaminated catheter hubs. The easy point is a retractable needle that can be used with a Luer lock, Luer slip, and prefilled syringes to provide injections.

Latest News:

• Payment of Dividend: On December 29, 2021, RVP declared USD 39,050 and USD 39,495.10 in dividends to Series II Class B and Series III Class B Convertible Preferred Stockholders. The quarterly dividend accrued at USD 1.00 per share per annum had been paid on January 24, 2022, to preferred shareholders of record on January 10, 2022.

Q3FY21 Results:

• Surge in Topline: The company witnessed a YoY growth of 34.20% in sales, net to USD 36.36 million in Q3FY21 (ended September 30, 2021) from USD 27.09 million in Q3FY20, attributable to growth in the Syringes segment.
• Decline in Profitability: Net income for Q3FY21 declined 41.28% YoY to USD 6.46 million from USD 11.01 million in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents (including short-term investments) of USD 29.95 million and total debt of USD 2.17 million.

Key Risks:

• Supplier Concentration: Purchases from Chinese manufacturers accounted for 91.9% and 80.5% of RVP's total purchases in Q3FY21 and Q3FY20, respectively. As a result, delays in receiving the required quantity or unfavourable pricing from Chinese manufacturers may cause output to be distorted, compromising the company's overall operational situation.
• Customer Concentration Risk: The US government accounted for 93.7% of net revenues in Q3FY21 and 94.2% in Q3FY20, respectively. According to RVP, the US government is anticipated to remain a key client through March 2022. Its reliance on individual clientele may jeopardize its long-term financial stability.

Outlook:

• Capex Guidance: RVP has enlisted the aid of a construction company and an architect to expand its current administrative offices. The expansion will cost roughly USD 5.0 million and is projected to be completed in H1FY22.

Stock Recommendation:

RVP's stock price has fallen 62.45% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 4.28 to USD 14.44.

Considering the significant correction in the stock price, strong topline performance, industry above financial metrics, solid profitability margins, associated risks, and current valuation. We recommend a "Speculative Buy" rating on the stock at the current price of USD 4.72, down 0.42% as of March 04, 2022, at 03:49 PM ET.

Three-Year Technical Price Chart (as on March 04, 2022, at 03:49 PM ET). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.