Long Term Bullish - Short Term Not, page-2

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16/10/19

22:04

Post #: 40919538
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Originally posted by jellyroll: ↑

Seems like some people on the board are bulled up in the extreme and in the longer term you will be right .... I suspect that in the shorter term (next 6 to 12 months) some of the more bullish forecasts are going to be very hard to be meet.

1) This quarter just closed is historically their weakest quarter by far.
2) This was also the quarter last year when they pulled down their sales forecasts for 2019.
3) If you back out the "market share" bought from MRS then their market share of the underlying Volpara suite is forecast at the end of this year to be where they were forecasting it would be at the end of last year.
4) They have never broken out how they are selling by manufacturer .... anecdotally to date they do very well with GE and not well with Hologic - For those that don't know Hologic is well over 50% of the US market for mammogram machines. Hologic has its own density product called Quanta and while inferior it would seem it makes sales on these machines more much difficult to close.
5) Selling the extra services and properly pricing density is slow work, not helped by the longer-term (now all 5 year) contracts they are entering in to.
6) They are having to customize their product for the larger networks who are also requiring trials .... they will get there but it moves very very slowly.

In summary, I think you will find that sales will happen and that they will be sticky but that sales conversion and price increase are going to be materially slower than some of the predictions I have read on the board recently. Add any potential disappointment this may cause and possible market turbulence over the next 6 to 12 months and I think you may get the opportunity to top up at a price not far above $1. As a reminder on the valuation side Morgans don't have VHT making a profit until FY2022 and then it is 7 cents. That puts Volpara on 23x FY 2022. If we take the average of all 3 analyst that cover the stock it is on 37x FY 2022. A great business and but it is going to require some patience and a strong stomach for volatility. On the plus side I am very keen to see them move in to the clinical trials space I think there is quick and material upside to revenue from that move, also I am keen to see what they can do in lung and what level of investment a density/enterprise product in that space would require. Management team is very strong and capable but they are going to need to be given time.

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I guess that just means accumulation opportunities for us long term holders!

VHT Price at posting: $1.63 Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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Long Term Bullish - Short Term Not, page-2

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