New stock pick: Veru Inc. (VERU) stock analysis, valuation, earnings forecasts.

Added Veru Inc. (VERU) to my portfolio.


Why did it pique my interest?

  1. Strong product portfolio with a few products pending FDA approval.

  2. Good growth of the current product allowed for marketing.

  3. About to hit profitability.

  4. Good ratings from analysts with a BUY rating from 4 analysts and the target price of $8.50 (current price is $3.06). Source: https://www.marketwatch.com/investing/stock/veru/analystestimates

Here is the summary of analyst predictions for Veru Inc. (VERU) revenues and earnings.

Source: https://simplywall.st/stocks/us/household/nasdaq-veru/veru


Based on these predictions the company is expected to show the following EPS numbers in the next few years:

Forward PE

29-Sep-20 -0.14

29Sep-21 -0.102

29-Sep-22 0.0367

29-Sep-23 0.397

29-Sep-24 1.26


With this level of projected earnings per share and using the current price of $3.06 the forward Price-to-Earnings ratio would be:


29-Sep-22 83

29-Sep-23 7.7

29-Sep-24 2.4


As you understand, the PE ratio of 2.4 is very low. The average industry PE is 18.2. So, if the company does deliver the projected EPS scores we could see the price to go up at least to $23 (7.6 times growth).


Clearly, there are some assumptions and risks involved here. Otherwise, it is unlikely the company would be worth this little.

The predictions for Veru Inc. (VERU) revenues and sales growth is likely taking into consideration its pipeline of product that are currently waiting for FDA approval.

Source: https://verupharma.com/wp-content/uploads/2020/06/Veru-Corporate-Presentation-June-2020.pdf


But the good news the company already has 2 products in the market. The FC2 is a long-standing product that has been around for long. Roman Swipes is a recent addition and has not yet impacted revenues too much.

FC2 sales alone have been steadily growing.

Source: https://www.marketwatch.com/investing/stock/veru/financials

Overall, the company is quite interesting to me with a lot in the pipeline and the company seems to be planning for bigger operations as it increased its employees count in the past year (double from 171 to 386). Source: https://simplywall.st/stocks/us/household/nasdaq-veru/veru#valuation

Now, in addition to the risk of not landing any of the drugs in development with FDA, there is another risk for Veru Inc. The company is burning cash and has little cash left. It already diluted shares in the past year and it is quite likely it will further do this in the upcoming 12 months to get more funding until it starts to generate profit.


Disclaimer: I own VERU stock. This post does not suggest or recommend you should buy VERU stock. I am doing this post to put my thinking on a page. Do your own due diligence before investing.

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