In response to the rising prices of potash products, the company has engaged in expansion and development of projects that will raise annual operational capacity to capture a significant share of the growth in global demand.
Global potash demand is expected to grow on average by more than 2 million tons annually. As a response to this, POT announced projects that will raise annual operational capacity to 15.7 million tons by the end of 2012.
Currently, the stock is trading at 20.1x our 2008 estimate of $11.03. Our target price of $250 is 22.7x our 2008 estimate.
BioMarin Now a Core Biotech
We believe strong sales of BioMarin Pharmaceutical, Inc.'s (BMRN) recently approved drug Kuvan, coupled with accelerating sales of Aludrazyme and Naglazyme, will drive the company to profitability in 2008 and beyond. The company's clinical pipeline also remains impressive. As such, we maintain our Buy rating on the stock.
We continue to believe its leading product, Aldurazyme, used for treating the ultra-rare genetic disorder mucopolysaccharidosis-I (MPS-I) and Naglazyme, for the treatment of MPS-VI, will make significant contributions to BioMarin's top-line growth in the coming years. We also expect meaningful contribution from Kuvan in the coming quarters.
We believe that the company is making steady progress on a number of candidates in its pipeline. The Serono deal has helped to improve the company's future outlook. The company expects to advance BMN110, an ERT for the treatment of MPS IVA, and BMN 168, a pro-drug formulation for the treatment of phenylketonuria, into clinical trials in 2009.
With $574.5 million in cash and equivalents and GAAP profitability on track for 2008, we remain comfortable with the company's cash position and management's ability to successfully bring the clinical compounds into the market. Keeping the above factors in mind we have set a price target of $46 per share.
We arrive at our price target by using a P/S multiple of 14.5x, multiplied by our 2011 sales estimate of $527 million, discounted at 15% for 3 years. We believe the target price is warranted given the company's competitive advantage in the ultra-rare genetic disorder market since there is practically no competition for Aldurazyme, Naglazyme and Kuvan.
Demand for CACI Will Remain
We maintain our Buy rating on CACI International, Inc. (CAI) after the company posted strong revenue of $634 million in Q3:FY08, up 34.1% year-over-year and up 9.8% quarter-over-quarter. EPS of $0.73 surpassed our estimate of $0.68.
The revenue growth was primarily driven by organic growth of 20%, specifically in the intelligence business, which was up 71% year-over-year. The management believes that the company's operating margin is stabilizing and expects it to increase to 8% over the next two years from 6.9% in the reported quarter. CAI raised its FY2008 revenue guidance from a range of $2.30-$2.40 billion to a range of $2.375-$2.425 billion while EPS should come around $2.65-$2.75. We have adjusted our FY2008/2009 revenue/EPS estimates accordingly with a target price of $55.
The management expects to generate revenues of $5 billion by 2012. The recently announced GSA Alliant contract is a 10-year Multiple Award/Indefinite Delivery, Indefinite Quantity contract with a $50 billion ceiling value.
