Pick Up Biotech Anesiva Cheap
Anesiva, Inc. (ANSV) plans to launch Zingo, a product we see having at least $200 million potential, in June 2008. We are big fans of Zingo and expect the stock to outperform once the market comes to grips with the product potential. In the meantime, development plans with Adlea, a potential billion-dollar blockbuster for post-surgical pain, is progressing nicely in phase III trials.
As such, we think things are going very well for Anesiva. Management continues to operate on plan and 2008 is shaping up to be a banner year. Yet, the stock has languished. Wall Street has yet to take notice and we think that represents an attractive opportunity for small-cap biotech investors. We are pleased with the recent positive developments at the company.
The approval of Zingo in August 2007 was a major step forward and hurdle cleared for management. Since that time management has formed a co-promotion partnership with Sagent Pharmaceuticals and outlined the commercialization launch plans. Sagent, although not a household names, is truly an ideal partner for Anesiva on Zingo considering the company's expertise to gain formulary status and its desire to promote specialty products into the hospital market.
We are bullish on Zingo and believe the drug-device has the potential to become the standard of care. Besides the positive developments with Zingo, Anesiva is also staying focused on leading pipeline candidate Adlea. We continue to see $12 as fair-value and we are reiterating our Buy rating. We arrive at our target by discounting our 2012 EPS estimate of $2.69, applying a peer-group average multiple of 25x, back to present day at 30 per cent.
Concur Tech Valuation Stretched
Concur Technologies (CNQR) reported results for its second quarter of 2008 that exceeded our revenue and earnings estimates. There was very strong growth in higher-margined subscription revenues in the quarter. We have raised our 2008 revenue projection to reflect an anticipated 63.5% year-over-year growth rate, and have also increased our earnings estimate based on company guidance.
The stock trades at a significant P/E premium to the S&P 500, its industry mean and median, and even its well-established peers. While Concur has a slightly weaker balance sheet but strong near-term fundamentals, we are concerned about the company's long-term prospects, as eventually it will begin to bump heads with the major industry players as it continues to grow at a significant pace.
The company reiterated its commitment to accelerate the pace of re-investments that are intended to sustain the level of revenue growth and innovation in the coming quarters. It rolled out Concur Pay almost six months ahead of schedule and this has led us to raise our 2008 revenue estimates.
