Alberto Abaterusso has earned a reputation for his stock picking abilities. According to TipRanks, a financial technology company that tracks and measures the performance of financial experts, the blogger’s recommendations have seen an average annual return of 22.7%, with the success rate landing at 70%. So, it makes sense that Abaterusso scores the #13 spot on TipRanks’ ranking of best-performing financial bloggers.
Bearing this in mind, we asked Abaterusso if he would share one of his top stock picks right now. Here is what the top blogger had to say:
Anika Therapeutics
Shareholders of Anika Therapeutics, Inc. (ANIK), a joint preservation biotechnology developer, headquartered in Massachusetts, United States, are still patiently waiting for market recognition that adequately repays their trust in this investment.
Recent corporate events have equipped this stock with a strong potential for a rebound, the effects of which have already been reflected by the most recent quarterly earnings report.
In the beginning of 2020, the company increased the diversification of the portfolio through the purchase of Parcus Medical, a sports medicine company, and Arthrosurface, a joint preservation solutions provider. The stock got a boost from these transactions, but it is still behind the broader market.
It is, however, just a matter of time. The trend will reverse, as the company is now better positioned within a favorable cycle, leading to higher revenues.
From The Most Recent Quarter
Shareholders have already received the first sign of a brighter future from the Q4 2020 earnings report, as revenues jumped nearly 10% year-over-year to $32.69 million. Additionally, adjusted net earnings of $0.12 per share beat the consensus estimate by $0.01.
The chart below demonstrates that quarterly revenue is improving on a year-over-year basis following the acquisitions of Parcus Medical and Arthrosurface.
Looking ahead, about $270 million in annual revenue is the milestone for Anika to reach by no later than 2024.
It should be noted that the gross margin of 53% still reflects the cost of the recent business expansion, but the metric is projected to improve, as negative impacts from acquisition-related expenses disappear along the way. It should return to the levels witnessed a couple of years ago when 75-80% of revenue was being transformed into gross profit.
This business expansion and increased profitability will show that Anika is taking advantage of a greater share of opportunities that the global market offers, enabling the share price to climb faster than the market.
Valuation
In light of current market valuations, this company looks like a compelling investment opportunity relative to its competitors.
With shares currently changing hands for $37.60 apiece, the share price is still below the 50-, 100- and 200-day simple moving average lines. What’s more, the market capitalization is $538.8 million.
Transformation
The acquisitions of Parcus Medical and Arthrosurface speed up the transformation process, helping it to become a global leader in the sports and regenerative medicine industry. The portfolio now includes many products that simplify the surgical treatments not only for parts of the body such as joints, hip, wrist, and shoulder, but also for distal extremities such as hands, fingers, feet, and toes.
Following this transformation, Anika will be able to satisfy a higher demand within the $70 billion US ambulatory surgical center market, which is projected to grow at a fast pace over the next few years as increasing cases of chronic illnesses in developing and developed economies drive up the demand for surgical procedures.
Market Prospects And Catalysts
The joint pain management market has solid prospects given that cases of osteoarthritis continue to rise as overweight and obesity affect larger groups of the population.
Anika offers its own biomolecule-based technology that was designed to keep joints and tissue healthy and working properly.
On top of this, other catalysts include a newly integrated distribution network now operating globally, an authorization for certain system solutions that are designed to prevent a surgical procedure of joint fusion, and the sale of two minimally invasive treatments following the US approval of specific clinical trials. These treatments are already being sold in more than 30 countries overseas.
Wall Street’s Take
In the last three months, two Buy ratings have been assigned by Wall Street analysts. So, ANIK is a Moderate Buy. At $52.50, the average analyst price target suggests 40% upside potential. (See Anika Therapeutics stock analysis on TipRanks)
Summary
The recent acquisition of two businesses operating in the osteoarthritis pain management market has provided Anika with robust potential for additional growth.
With this in mind, the share price is expected to continue to move higher, and current valuations indicate the share price is not expensive. Therefore, Anika reflects an intriguing investment opportunity at the moment.
Disclosure: On the date of publication, Alberto Abaterusso did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
