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APPLIED DNA SCIENCES – ZACKS ANALYSIS 2016
ZACKS Analysis - Jan 2016
Based on the strong financial performance, recent operational achievements, as well as the company s
strong balance sheet, we maintain our Buy rating for APDN shares and re-set our 12-month price target
to $7.50 per share from previous $10.00 per share due to the current market condition especially the
sentiment to biotech industry.
We are impressed by the continued year over year revenue growth in fiscal 1Q16 even with the
seasonality of the cotton ginning season to the Company's business. We are especially pleased to see that APDN has entered into the lucrative molecular diagnostic market.
This is a huge market with high growth potential in the next decade for the company.
We remain optimistic about APDN s prospect. The company s fundamentals remain strong. The
Company s technology is unique and has competitive advantages over its peers. The Company is well
positioned to boost its top line and bottom line in the coming quarters. According to our long term
financial model, the Company s revenue will grow at a compound annual growth rate (CAGR) of 38% in
the next 4 fiscal years from 2016 to 2020. APDN will become profitable in fiscal 2018 with net income of
$2.9 million or EPS of $0.10 per share. EPS will grow to $0.60 per share in fiscal 2020 based on total
revenue of $45 million.
APDN is a high growth company. In terms of valuation, we apply a P/E of 30x to our estimated EPS of
$0.60 in fiscal 2020, discounted at 25% for 4 years. This way, we get our price target of $7.50 per share.
This values the company at about $180 million in market cap based on 24 million outstanding shares, which is conservative in our view. As long as the Company can execute on its growth strategy correctly,
we believe value should be generated for shareholders
