Biomerica, Inc. (NASDAQ:BMRA) is an under-covered biotech stock, developer, manufacturer, and marketer of medical diagnostic products for the early detection and monitoring of chronic diseases and medical conditions.
Given the company’s recent announcement coupled with a market capitalization of just under $25 MM, we believe Biomerica to be substantially undervalued. We like Biomerica because biotechnology companies have the potential to grow quickly and achieve considerable profitability — therefore they can often become acquisition targets.
Biomerica Valuation & Upcoming Earnings
As a valuation metric, we’re using an Enterprise Value to Revenues ratio, since the EV/Revenues ratio can be a great metric to determine how much of a biotech company’s growth is baked into the price.
Compared to a handful of diagnostic-device competitors, we see that shares of BMRA are priced attractively. In addition, Biomerica is supposed to release their recent quarterly financials this coming Tuesday, August 29th, which may bring the company additional attention from Wall St. According to Zacks Investment Research, the consensus EPS forecast for the quarter is $-0.02, compared to the reported EPS for the same quarter last year which was $-0.16.
Growth Potential for Biomerica
Biomerica’s testing kits and medical devices are currently sold to clinical laboratories, physician’s offices, as well as over-the-counter at pharmacies for at-home use. In an effort to expand the company’s reach, Biomerica just recently announced a potentially lucrative distribution agreement to supply one of its point of care products to a major pharmaceutical company for distribution in Mexico.
With an estimated population of roughly 127.5 million people, Mexico represents a massive market opportunity. Despite Mexico’s health expenditure per capita being slightly lower than the world average, the preventative nature of Biomerica’s products make this deal very appealing.
Biomerica’s point of care product has already received approval from COFEPRIS (the Comisión Federal para la Protección contra Riesgos Sanitarios) — Mexico’s U.S. Food & Drug Administration equivalent, thereby clearing it for immediate sale in Mexico.
Biomerica already has a 10,000 sq. foot production facility in Mexicali, Mexico. Like the company’s 23,000 sq. foot FDA-registered Irvine, CA headquarters, the Mexico facility is both EN ISO 13485 and FDA certified.
Although the specific terms of the distribution agreement are were not disclosed due to confidentiality, it was mentioned that “this multinational pharmaceutical company generates over $1.4 billion in annual revenues and has over 11,000 employees worldwide.”
Zack Irani, CEO of Biomerica said, “This is a tremendous validation of our product by a large healthcare company and we hope to announce more distribution agreements with them or other partners down the road. Both companies are excited about the sales potential for this point of care product in the Mexican market,” reported Global Newswire.
Conclusion Regarding Biomerica
Presently, BMRA shares are trading below $3. With an upcoming earnings announcement, it may not stay there for long. Be sure to subscribe to Growth Stock Network’s daily newsletter to never miss an important growth stock opportunity.