Inotiv (NOTV) AI Stock Analysis

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Inotiv

(NASDAQ:NOTV)

Rating:45Neutral

Price Target:

$2.50

▲(2.88%Upside)

The overall stock score is primarily impacted by poor financial performance, including high leverage and negative cash flows. While the earnings call provided some positive insights, the valuation remains unattractive due to a negative P/E ratio. Technical indicators show mixed signals, contributing to a cautious outlook.

Positive Factors

Demand

Discovery orders increased by 16%, marking the first growth in this area in two years, which is expected to drive overall growth.

Earnings

AEBITDA exceeded expectations, indicating financial performance is stronger than anticipated.

Liquidity

The recent financing reduces liquidity risk and could significantly improve the company's financial position and long-term strategy.

Negative Factors

Debt

The company still needs to de-lever its balance sheet as it has $393M of debt.

Research Model Demand

A material change in research model demand would impact Inotiv’s business.

Inotiv (NOTV) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$87.60M

Dividend YieldN/A

Average Volume (3M)497.09K

Price to Earnings (P/E)―

Beta (1Y)1.63

Revenue Growth-13.09%

EPS Growth-15.29%

CountryUS

Employees1,977

SectorHealthcare

Sector Strength40

IndustryMedical - Diagnostics & Research

Share Statistics

EPS (TTM)-0.44

Shares Outstanding34,352,978

10 Day Avg. Volume463,820

30 Day Avg. Volume497,091

Financial Highlights & Ratios

PEG Ratio>-0.01

Price to Book (P/B)0.52

Price to Sales (P/S)0.00

P/FCF Ratio-1.54

Enterprise Value/Market Cap0.92

Enterprise Value/Revenue0.04

Enterprise Value/Gross Profit0.76

Enterprise Value/Ebitda-1.43

Forecast

1Y Price Target

$3.75

Price Target Upside54.32% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Inotiv Business Overview & Revenue Model

Company DescriptionInotiv, Inc. is a contract research organization (CRO) that provides a range of nonclinical and analytical drug discovery and development services to pharmaceutical, biotechnology, and medical device companies. Operating primarily in the preclinical sector, Inotiv offers services such as toxicology, pharmacology, metabolism, bioanalysis, and consulting services to support clients in the development of new drugs and therapies.

How the Company Makes MoneyInotiv makes money through its comprehensive suite of contract research services offered to pharmaceutical, biotechnology, and medical device companies. The company's revenue model is primarily based on fee-for-service contracts, where clients pay for specific preclinical research services, including toxicology studies, pharmacokinetics, pharmacodynamics, and safety assessments. Key revenue streams include long-term research projects, short-term studies, and consulting services tailored to client needs. Inotiv's earnings are significantly influenced by the demand for drug discovery and development services, strategic partnerships with industry players, and its ability to deliver high-quality, reliable research outcomes that expedite the drug development process for its clients.

Inotiv Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q2-2025)

% Change Since: 20.90%|

Next Earnings Date:Aug 06, 2025

Earnings Call Sentiment Positive

The earnings call reflects a generally positive sentiment with significant revenue growth and improved operating margins, particularly in the RMS segment. However, challenges remain in the DSA segment with revenue decline and margin deterioration. The company's strategic initiatives and settlements have contributed positively to its financial position.

Q2-2025 Updates

Positive Updates

Revenue Growth

For the second quarter of fiscal 2025, total revenue was $124.3 million, a year-over-year increase of $5.3 million or 4.4%. This was mainly due to an increase in RMS segment revenue of $6.6 million.

RMS Segment Performance

RMS segment revenue increased by 9.1% compared to Q2 of fiscal 2024, primarily due to higher NHP volumes sold.

Improved Operating Margins

RMS operating margins improved and were the strongest since Q1 of fiscal year 2024.

Settlement and Financial Position

The company settled a litigation case for approximately $7.6 million, improving financial resources.

Positive Book-to-Bill Ratio

DSA quoting and awards remained in line with the last nine months, with a book-to-bill ratio of 1.01:1 in Q2 of fiscal 2025.

Optimized RMS Site Plan

The refined RMS site optimization plan is expected to result in net annual savings of $6 million to $7 million.

Negative Updates

DSA Segment Revenue Decline

DSA revenue in fiscal Q2 was $45.3 million, a decrease from $46.6 million in Q2 of fiscal year 2024, primarily driven by a decrease in general toxicology services revenue.

DSA Margin Deterioration

DSA margins have deteriorated over the last two quarters due to higher cost base NHPs, increased overtime, labor costs, utility costs, and operating supplies.

Higher Interest Expense

Interest expense in Q2 of fiscal 2025 increased to $13.4 million from $11.1 million in Q2 of 2024, primarily due to interest on second lien notes issued in September 2024.

Company Guidance

During the Inotiv Second Quarter Fiscal 2025 Earnings Call, management provided guidance with several key metrics. Total revenue for the quarter was $124.3 million, an increase from $119.9 million in Q1 of fiscal 2025 and $119 million in Q2 of fiscal 2024, marking a year-over-year rise of 4.4%. This growth was primarily driven by a $6.6 million increase in the RMS segment, partially offset by a $1.3 million decrease in the DSA segment. Adjusted EBITDA for the quarter was $8 million, representing 6.4% of total revenue, compared to $3.1 million or 2.6% in the prior year period. The RMS operating margins improved significantly, with non-GAAP operating income reaching $15.6 million or 12.5% of total revenue. The company anticipates net annual savings of $6 million to $7 million from its revised RMS site optimization plan, which involves a capital investment of approximately $6.5 million. Despite some challenges in the DSA segment, including higher costs, the book-to-bill ratio remained at 1.01:1, with new orders 27% ahead of Q2 fiscal 2024. Management expects continued revenue and adjusted EBITDA growth over the next two quarters of fiscal 2025.

Inotiv Financial Statement Overview

Summary

Inotiv faces significant financial challenges, including consistent revenue declines, operating losses, high leverage, and negative cash flows. These factors indicate operational inefficiencies and demand strategic interventions.

Income Statement

Negative

Inotiv's revenue has shown significant volatility, with a sharp decline from 2023 TTM levels. The company has been consistently operating at a net loss, with negative EBIT and EBITDA margins indicating operational inefficiencies. Revenue growth is negative, reflecting a challenging market environment or strategic missteps.

Balance Sheet

Negative

The balance sheet reflects high leverage with a debt-to-equity ratio that has improved but remains concerning. Equity has been shrinking, and the company faces potential risks if liabilities continue to outweigh assets. However, the reduction in total debt is a positive sign of deleveraging efforts.

Cash Flow

Negative

Cash flow analysis shows negative free cash flow and operating cash flow, indicating potential liquidity issues. The operating cash flow to net income ratio is unfavorable, highlighting inefficiencies in converting revenue into cash. Free cash flow remains negative, reflecting capital expenditure challenges.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
480.40M	490.74M	572.42M	547.66M	89.61M	60.47M
	Gross Profit
105.05M	111.17M	165.44M	157.21M	30.16M	18.24M
	EBIT
-52.36M	-86.41M	-81.46M	-27.45M	1.53M	-3.06M
	EBITDA
5.65M	-26.76M	-26.51M	-273.42M	15.37M	1.03M
	Net Income Common Stockholders
-87.47M	-108.44M	-105.14M	-337.26M	10.89M	-4.68M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
32.70M	21.43M	35.49M	18.52M	138.92M	1.41M
	Total Assets
815.38M	781.36M	856.53M	962.90M	321.86M	61.59M
	Total Debt
429.26M	445.12M	417.64M	386.49M	174.19M	36.41M
	Net Debt
396.57M	423.69M	382.15M	367.98M	35.27M	35.01M
	Total Liabilities
608.22M	610.86M	588.04M	603.13M	216.73M	54.00M
	Stockholders Equity
207.16M	170.50M	269.15M	360.37M	105.13M	7.60M
Cash Flow		Free Cash Flow
-54.14M	-29.11M	380.00K	-41.52M	-1.73M	-4.91M
	Operating Cash Flow
-34.49M	-6.80M	27.88M	-5.22M	10.75M	1.29M
	Investing Cash Flow
-18.11M	-16.83M	-28.75M	-333.72M	-54.06M	-10.13M
	Financing Cash Flow
39.26M	9.68M	15.87M	203.15M	198.83M	9.64M

Inotiv Technical Analysis

Technical Analysis Sentiment

Positive

Last Price2.43

Price Trends

50DMA

2.17

Positive

100DMA

3.01

Negative

200DMA

2.76

Positive

Market Momentum

MACD

0.10

Negative

RSI

64.37

Neutral

STOCH

77.91

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOTV, the sentiment is Positive. The current price of 2.43 is above the 20-day moving average (MA) of 2.15, above the 50-day MA of 2.17, and below the 200-day MA of 2.76, indicating a bullish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 64.37 is Neutral, neither overbought nor oversold. The STOCH value of 77.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NOTV.

Inotiv Risk Analysis

Inotiv disclosed 41 risk factors in its most recent earnings report. Inotiv reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Inotiv Peers Comparison

Overall Rating

UnderperformOutperform

Sector (53)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MDXH	55 Neutral	$104.93M	―	-1552.23%	―	25.46%	21.83%
DRIO	55 Neutral	$31.91M	―	-42.58%	―	47.21%	48.56%
Sector *	53 Neutral	$5.19B	3.33	-45.04%	2.83%	17.58%	-0.66%
NOTV	45 Neutral	$87.60M	―	-47.95%	―	-13.09%	-15.29%
VNRX	45 Neutral	$49.91M	―	138.92%	―	64.15%	41.65%
BDSX	41 Neutral	$50.77M	―	-1454.41%	―	35.76%	47.48%
BNR	39 Underperform	$35.40M	―	-51.22%	―	-5.72%	48.12%

* Healthcare Sector Average

Performance Comparison

NOTV

Inotiv

2.80

0.85

43.59%

VNRX

VolitionRX

0.49

-0.19

-27.94%

DRIO

DarioHealth

0.70

-0.76

-52.05%

MDXH

MDxHealth

2.16

-0.57

-20.88%

BNR

Burning Rock Biotech

3.17

-3.98

-55.66%

BDSX

Biodesix

0.34

-1.01

-74.81%

Inotiv Corporate Events

Executive/Board ChangesShareholder Meetings

Inotiv Shareholders Approve Key Governance Decisions

Neutral

Mar 13, 2025

On March 13, 2025, Inotiv held its annual meeting of shareholders, where key decisions were made regarding the company’s governance and operational strategies. Two Class I board members were elected for a three-year term, Ernst & Young LLP was ratified as the independent auditor for fiscal 2025, and the compensation of named executive officers was approved. Additionally, shareholders voted to hold advisory votes on executive compensation every three years, and the 2024 Plan Amendment was approved.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.