Analysts Remain Bullish on Fiscal Year Performance (OTC:CDXC)
After Years of R&D; Getting More Product to Market is a New Focus of Management…
By Dennis Askew
Published: February 27, 2012 9:34:37 AM PST
The evolving story at ChromaDex Corp (OTC:CDXC) is almost atypical of companies that have spent a lot of time and money on developing their core, in this case nutrients, and then branding it, packaging it, and getting it into a sales chain.
CDXC has done that in a proprietary fashion with its Blue Science products, but it is now in the early stages of taking its ‘ingredients’ to outside businesses with expansive distribution beyond that of the Company’s. Dow Chemical’s comes to mind: Their own brand and key compounds sold to third parties for inclusion in their products.
Last Friday CDXC signed a letter of intent with Glanbia Nutritionals Inc., a global ingredient and micronutrient premix company, for the distribution of CDXC’s pTeroPure. Glanbia Nutritionals will serve as the primary distributor of pTeroPure in North America.
In short, pTeroPure belongs to a class of compounds called phytoalexins, which are naturally produced by plants when under attack by pathogens. CDXC’s Pterostilbene is found in certain berries like blueberries, cranberries, sparkleberries, lingonberries, and grapes that are considered anti-oxidants by nature.
ChromaDex as a result of its exclusive worldwide patent rights for pterostilbene based on the technology licensed from the University of Mississippi and the USDA has something to be excited about… a new revenue stream.
Which, when you consider the other news on the Company from last Friday; an update by RedChip Research analysts, is moving CDXC towards profitability this year.
In looking over ChromaDex this past Nov RedChip assigned a target price $2.10 for CDXC and the Company’s proprietary, science-based solutions and ingredients to the dietary supplement, food and beverage, cosmetic and pharmaceutical industries.
Analyst Zhang and Specialist Cunningham, according to the common stock sale activity, revised their target price based on the addition of shares. As a result, RedChip changed its Strong Buy rating to a Buy rating and at this time believes it’s appropriate to maintain a net profit estimate in year five of $136 million, with shares outstanding targeted at 100,000,000, which gives an EPS that would be $1.36.
In their opinion, with new management in place, the potential for pTeroPure will become more evident in coming quarters, and investors will increasingly focus on the longer-term potential of ChromaDex rather than near-term earnings.
Recognizing the highly speculative nature of their long-term earnings estimate of $1.36, they have chosen to assign a conservative multiple of 10 and discounted the resulting value by 50% per annum to reach a 12-month price target of $1.79, representing a 139% increase from the current market price, which is below the 52-week high of $2.01.
CDXC Shares are currently trading in the $0.71 range.
What I saw in their numbers for EPS fans was a Q3 ’12 loss of -$0.01 turning to a Q4 gain of +$0.01 and Q3 ’12 Revenue Estimates of $5.5 million growing to Q4 ’12 Revenue Estimates of $9.7 million with FY ’12 estimates on the income statement coming in at $23,400,000. While the cash flows at CDXC are a bit anemic, the Company still has $2 million plus in cash on hand and new revenue streams will get the cash flowing.
So now the ChromaDex story turns to one of sales and revenues and I would say the new Glanbia deal advances the cause and sets a precedent for the sales team.
I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.
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