Shares of Avid Bioservices, Inc. (CDMO) are up 125% over the past 12 months. Avid provides a range of process development, Current Good Manufacturing Practices (CGMP) clinical, and commercial manufacturing services to the biotechnology and biopharmaceutical industries.
CDMO recently delivered better-than-expected second-quarter performance on its top-line and bottom-line fronts.
During the quarter, revenue increased 24% year-over-year to $26.1 million, beating analysts’ estimates by $2.1 million. Similarly, earnings of $0.06 per share exceeded expectations by $0.03. The revenue growth was driven by fees received from a customer for unutilized reserve capacity and higher process development revenue.
Furthermore, in Q2 Avid signed new business orders of $36 million, while the backlog stood at $120 million. In a significant milestone, Avid’s stock was added to the S&P SmallCap 600 Index in Q2.
With these positives in mind, let us take a look at the changes in Avid’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Avid’s top two risk categories are Finance & Corporate and Legal & Regulatory, contributing 39% and 17% to the total 36 risks identified, respectively. Compared to a sector average of 29%, Avid’s Finance & Corporate risk factor is at 39%.
In its recent quarterly report, the company has added one key risk factor.
Under the Tech & Innovation risk category, Avid noted that it is expanding its CDMO service into viral vector development and manufacturing services for the cell and gene therapy market. This move involves a number of uncertainties including, Avid experiencing delays in the construction of manufacturing facilities and related laboratories, and substantial cost overruns. (See Insiders’ Hot Stocks on TipRanks)
Additionally, entering into a new service offering may distract Avid’s teams from its core mammalian cell culture operations. If the company is not successful in navigating these factors, then its operations and results may be adversely impacted.
Wall Street’s Take
Consensus on the Street is a Moderate Buy based on 2 Buys and 1 Hold for the stock. The average Avid Bioservices price target of $33.50 implies a potential upside of 34.8%.
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