ADMA Biologics Inc (NASDAQ: ADMA) is an end-to-end commercial biopharmaceutical company dedicated to manufacturing, marketing and developing specialty plasma-derived biologics for the treatment of immunodeficient patients at risk for infection and others at risk for certain infectious diseases.  

Key highlights

• Expanding the number of its BioCenter: The firm now has nine plasma collection facilities under its corporate umbrella, all of which are in various phases of FDA clearance and development, with six of them already operating and collecting plasma. By the end of 2023, the company expects to have 10 or more plasma collection centers FDA-approved.

• Strong Commercial Opportunities: The recent physician adoption and use of the company's hyperimmune product portfolio, including ASCENIV, gives a hope to the group. The product's unique production processes and consequent differentiated profile are lighting the Company's medical education programs and commercial details, which the Company thinks will continue to resonate with physicians, providers, and patients.

• Clocking negative margins on a continuous basis: The company has failed on maintaining its pace and is witnessing negative performance on the sequential basis, under its operating matrix, comprising of all major margin, which exhibits the extreme pressure on the company.

• Long cash cycle days: The company’s Cash Cycle (Days) has increased compared to the previous sequential quarters, implying the company is taking more days to convert its inventory to cash. In Q3 2021, its Cash Cycle stood at 523.5 days. Moreover, it’s too high compared to an industry median number which stood at only 74.5 days.

Stock recommendation 

Based on preliminary unaudited financial data, the company forecasts total revenues of roughly USD 81 million in fiscal year 2021, up from USD 42 million in fiscal year 2020. This represents a significant increase of nearly 92% over fiscal year 2020. As it enters the next phase of its profit-oriented business cycle, the Company anticipates steady execution. Larger rivals are likely to dedicate supply mostly to current client accounts, therefore the business believes its strong plasma supply position will allow continuing acquisition of new customers. However, the group's negative margins on a sequential basis demonstrate the company's tremendous strain. Furthermore, it has a long cash cycle days and a higher average receivable day, which could make it difficult for the company to pay its financial obligations. Hence, based on the above rationales and valuation, we recommend “Avoid” rating on the stock at the closing price of USD 1.60 on February 25, 2022.

One-Year Technical Price Chart (as on February 25, 2022). Source: REFINITIV, Analysis by Kalkine Group

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

Infinity Pharmaceuticals, Inc. (NASDAQ: INFI) is a clinical-stage innovative biopharmaceutical company dedicated to developing novel medicines for patients suffering from cancer.

Key highlights 

• Stock trading in a downward channel: On a daily chart, the INFI stock is trading in a downward channel since October 2021 and has been making lower lows since then. This is a bearish signal and indicates selling pressure. Moreover, the stock has closed way below of its simple moving averages of 50-days and 100-days, respectively, which further illustrates the prevailing weakness in the technical chart.

One-Year Technical Price Chart (as on February 25, 2022). Analysis by Kalkine Group

• Extended losses: In 9MFY21, the company reported a loss from operations, and net loss of USD 33.5 million and USD 33.6 million, respectively, which is higher than USD 28.2 million and USD 29.8 million in pcp. This was primarily due to higher input costs like research & development expenses, increase in general & administrative costs etc. and, continuation of the above trend is likely to dampen the upcoming performance.

• Increase in net cash used in operating activities: In 9MFY21, the company reported its net cash used in operating activities of USD 30.9 million, which is higher than the net cash used of USD 27.2 million in pcp. This is primarily due to higher net losses and remains a key concern for the company.

Stock Recommendations: The company is battling with rising input costs, which is dampening the company’s overall performance. The stock of INFI tumbled ~48% and ~68% in the last three months and six months, respectively, which indicates higher selling pressure due to weak fundamentals. The stock is trading near the lower band of its 52-weeks trading range of USD 3.89 and USD 0.97, respectively. The INFI stock is available at a higher valuation of EV to sales multiples of 7.3x on an NTM basis, as compared to the industry (Healthcare) median of 4.2x. Hence, considering the aforesaid facts, we give an ‘Avoid’ stance on the stock of INFI at the closing price of USD 1.13 on February 25, 2022.

One-Year Technical Price Chart (as on February 25, 2022). Analysis by Kalkine Group

Pyxis Tankers Inc. (NASDAQ: PXS) is engaged in the seaborne transportation of refined petroleum products and other bulk liquids. 

Key highlights

• Poor margins: The company reported a negative EBITDA margin and operating margin of 19.8% and 38.9%, respectively, as compared to the industry median of 65.9% and 49.7%, respectively. Moreover, the company’s posted a negative net margin of 49.6% in Q3FY21, as compared to the industry median of 46.9%. This indicates that the company is struggling to control its input costs, which remains a major concern for the company.

• Highly leveraged balance-sheet: At the end of Q3FY21, the D/E ratio stood at 1.15x, which is significantly higher than the industry median of 0.68x. A higher ratio suggests lower financial flexibility of the firm. Moreover, long-term debt to total capital stood at 48.2% in Q3FY21, as compared to the industry median of 32.9%., which illustrates higher balance sheet risks.

• Weak Liquidity profile: In Q3FY21, the company’s quick ratio and current ratio stood lower at 1.09x and 1.21x, respectively, as compared to the industry median of 1.18x and 1.35x, respectively. This indicates that the company has a relatively weaker working capital management when compared to the industry median.
  

Stock Recommendation:

In 9MFY21, the company reported a higher operating loss of USD 3.9 million, as compared to an operating loss of USD 0.4 million in pcp. This was primarily due to significantly higher voyage related costs & commissions and elevated vessel operating expenses, which has dampened the company’s performance. Moreover, the stock of PXS is trading at a considerably higher valuation of EV to EBITDA multiples of 8.4x, as compared to the industry (Freight & Logistics Services) mean of 3.6x. Hence, considering the above facts, we give an ‘Avoid’ stance on the stock of PXS at the closing price of USD 0.5341 on February 25, 2022.

One-Year Technical Price Chart (as on February 25, 2022). Analysis by Kalkine Group

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