Why I am excited about my investment in BDSI stock

Updated: Nov 17, 2020

I originally alerted about BioDelivery Sciences International, Inc. (BDSI stock) on June 26th here: https://www.wininstocks.com/post/top-15-stocks-of-companies-with-fastest-growing-sales-in-2020-that-are-about-to-hit-profitability

There are a few reasons why I believe BioDelivery Sciences International, Inc. (BDSI stock).

1. the company has turned to profit for 2 quarters in a row.

2. A strong earnings outlook by stock analysts:

BioDelivery Sciences International, Inc. (BDSI stock) past and projected EPS

As you can see, earnings predictions are :

2020: $0.178

2021: $0.424 (+138%)

2022: $0.85 (+100%)

2023: $1.147 (+35%)

2024: $1.377 (+20%)

At the current price of $4.49 you can calculate forward PE:

2020: 25.2

2021: 10.6

2022: 5.3

2023: 3.9

2024: 3.3

As you can see, with this kind of EPS score the company price may easily go up 6 to 8 times by 2023 to achieve a standard PE score between 20 and 35.

3. BioDelivery Sciences International, Inc. (BDSI stock) Institutional Ownership and low public float.

For a company with a market cap of under $500 million, it has quite a lot of interest from institutions with 70% of company shares owned by them. This also means quite low public float. If there is interest in the stock among the public, the stock price may grow quickly.

BioDelivery Sciences International, Inc. (BDSI stock) ownership breakdown

4. Based on https://www.marketwatch.com/investing/stock/bdsi/analystestimates there are 8 analysts covering BDSI stock and all of them give a BUY rating. The average target price for BDSI stock is $8.

You might be wondering why this stock is so cheap given all the positives above. There is some risk involved:

  1. Revenues slightly declined in Q2 2020 vs. Q1 2020. Up 23% vs. Q2 2019. However, BioDelivery recorded Belbuca (key product for BioDelivery) prescriptions of more than 104,687 in the quarter, representing a prescription volume growth of more than 31% in the quarter.

  2. Q2 earnings for BDSI stock were $0.01 vs. expected $0.03. However, the reported earnings include share-based compensation and certain other expenses. Excluding these items, adjusted earnings were 10 cents per share.

  3. Uncertainty over CEO. The company recently replaced Herm Cukier as CEO with Jeff Bailey. There seems to be some under-the-carpet political fight going on at the company.

  4. Whether they add a 3rd drug or not. BioDelivery currently has 3 products in its portfolio. One of them, Bunavail, was clearly underperforming and the company recently announced it will be discontinuing it. This leaves 2 products in the portfolio. While the other 2 products have been growing in subscriptions, investors would like to see a 3rd product to be added.

  5. High debt compared to equity.

Check my portfolio performance, watch list, and list of past stock analysis here: https://www.wininstocks.com/watch-list-and-portfolio

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


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