*** This thread has been allocated to OPTISCAN *** Petroleum discussions fall under OILGAS Please use that ticker
New report out from Huntley on OPTISCAN >> "OIL continued sound progress since our last review. For the nine months to March 31, 2006 revenue of $3.2m was 90% higher than in the pcp, a good percentage gain off a low base."
"We increase our valuation
OIL's cash balance remains sound and should be sufficient to reach cashflow breakeven. Our valuation of around $3.50 assumes market penetration leveling off at 25% of the flexible market by 2011 and 12.5% penetration of the rigid market by 2012. We substantially upgrade our estimates of potential market size. We do not add value for other potential applications. While our estimates entail large numbers we believe they are not unrealistic. At such an early stage such estimates may still prove inaccurate with actual sales well below or above our assumed level. The stock will not trade near our valuation until more indicative revenue starts to flow.
The daylight between the share price and our valuation provides a sufficiently large buffer to justify a position at current price levels, now roughly 40% above the share price at the time of our last buy recommendation. Even if we reduce our market penetration estimates by a factor of four we derive a valuation around $0.80, a way above the current share price. The stock is a Speculative Buy below $0.60. It remains speculative because meaningful sales traction has yet to occur. A superior competitive technology may emerge in coming years. We think it is possible that the company will be acquired by Pentax within the next 18 months."
OIL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
