I don't like the report, its recommendation is "speculative buy" and only targets a 20 cents upside.
How can it be a speculative buy when it has a PE now, either you say "buy" or say nothing. If you say "spectulative buy", you need to define the speculation element. I would imagine the speculative element should deliver an upside of at least $2, based on potential windfall profits such as sudden turn of events, say Relenza ratio in the stockpile goes up to 80% because of Tamiflu problems or may be governments decide that 25% population coverage is not enough and they need to cover 50% or 100%. Anything that will has a potential to deliver hot white super profits needs to be reported.
If you are going to speculate, there are many other stocks that you can punt on. You would need to look for potential trading profits in access of 50%, not 20c upside on a $1.60 stock.
This report only puts brakes on the share price. In the report its uses a classical technique of valuation by quoting a PE ratio, if its a profitable company with several years profits, this is OK. If you use this ratio, a PE ratio of 35 suggest it is overprice. I would imagine a PE ratio of 35 would even be consider as fully price for a bank stock let alone a small company like Biota.
No, its recommendation is not appropriate for a R&D stock. If you say "speculative buy", $3.60 target by 2008 will be more like it.
BTA Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
