Derma Sciences: Valuation Is Unsustainably Low, Says Roth Capital; Reiterates Buy

In a research report issued today, Roth Capital analyst Scott Henry reiterated a Buy rating on Derma Sciences (NASDAQ:DSCI) with a $16.75 price target, which represents a potential upside of 93% from where the stock is currently trading.

Henry outlined a few reasons to believe that the worst is over:

  • Reason #1 – Weather comps probably improve in 1Q15. Recall, 1Q14 was challenged by poor weather, which reduced visits to wound care clinics. Chances are that this will likely improve in 1Q15 and that this could lead to outsized growth to start the next fiscal year. Even if weather remains dismal, the bargain basement comps could still allow growth.
  • Reason #2 – Comps also ease in 2Q15. Recall, 2Q14 also was impacted by non-recurring items including 1) Medihoney counter-detailing attacks, and 2) lower reimbursement for TCC-EZ. Both of these issues should have notably less impact in 2Q15, and this should lead to another quarter of easy comps for DSCI revenue growth.
  • Reason #3 – DSC 127 finally starting to gain traction in 2015. After meeting with management, we have renewed confidence that DSC 127 should reach the halfway point for enrollment in 1Q15. This leads to clinical data likely in 1H16. We expect that investors will again get excited about this program as we near the 12-month window for data.

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Scott Henry has a total average return of 5.5% and a 40.0% success rate. Henry has a -27.9% average return when recommending DSCI, and is ranked #783 out of 3324 analysts.

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