And despite these ostensibly-positive developments, the broker's Target Price is - somehow - reduced by a whopping 36% to just $3.01... in the space of a mere 7 or 8 months (!).
I have to admit that it is very strange. If I may guess, part of the reasons for the reduction in the target price is the recent 5% dilution caused by the issue of new shares to MNK. If everything else stays the same, 5% dilution should only reduce the target price to $4.43. This is still very different from the new target price of $3.01.
Maybe Bell Potter is anticipating further and bigger share dilution that is likely to happen in 2017. Only massive cash injection into MSB in the region of hundreds of millions of dollars will provide long enough cash runway for MSB so that it can concentrate on its efforts in bringing various products to market.
Half-hearted raisings in the tens of millions of dollars will not be enough to silence the doubters who are always focusing on MSB's cash levels.
If my wild guess at the reason behind Bell Potter's downgrade in target price is correct, that means they are expecting an extra 190 millions shares to be issued in 2017/2018. 190 millions of shares at current price is equivalent to MSB raising about $304 million.
An amount this big will give MSB more than 3 years of peace, without having to address market's constant worry about its cash positions.
Most likely though, it's a combination of things, in other words, expectation of further raisings and changes in the short term outlook, that caused the reduction in the target price to $3.01.
(20min delay)