Roth Capital Reiterates Buy On Derma Sciences Following Analyst Day;Revising Estimates

In a research note released this morning, Roth Capital analyst Scott Henry reiterated coverage with a “Buy” rating on Derma Sciences Inc. (DSCI) and a price target of $18.00 a share following an analyst day, which was held in New York on June 17th, 2014.

Henry noted, “We return from the analyst day excited about growth opportunities in the near-term (from Medihoney, TCC-EZ, Amnio), mid-term (Amnio), and long-term (DSC-127 for multiple indications).

We arrive at our $18/share price target by valuing the low-growth base business ($1.00/share), the high growth advanced wound care business ($9.00/share), the pipeline compound DSC127 ($7.00/share), and residual cash ($1.00/share). Within each segment, we note the primary risks as follows: 1) base business – continued risk of commoditization and lower gross margins, 2) advanced wound healing – risk of competition that impacts share and gross margins, and 3) DSC127 – future clinical risk and execution of selling risk. On a multiple basis, our $18/share price target correlates to a ~25 multiple of 2017 targeted EPS of $1.00 discounted for 2 years at 15%.”

According to TipRanks, which measures analysts and bloggers success rate based on how their calls perform, analyst Scott Henry currently has a one-year average return of 43% and a 67% success rate. He is ranked #332 out of 3114 analysts.

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