Champions Oncology Inc. (CSBR:NASDAQ) just reported Q1 fiscal year 2023 (FY23) results "demonstrated consistent strength in the underlying business," reported ROTH Capital Partners analyst Scott Henry in a September 21, 2022 research note. ROTH maintained its Buy rating on this firm that provides research and development solutions and services to oncology drug developers.
Revenue during the quarter was $13.7 million ($13.7M), slightly above ROTH's estimate of $13.4M. The New Jersey-based company spent $7M during the quarter, right around ROTH's forecast of $6.9M.
"We highlight Champions as an emerging small-cap investment that is not already well known," Henry wrote. "The fundamentals that we find appealing include 1) revenue growth consistently near 20%, 2) a base business that is turning cash flow positive, and 3) a balance sheet absent of debt."
Henry summarized Champions' results for Q1 FY23, the quarter that ended July 31, 2022, noting they were in line with expectations. Revenue during the quarter was $13.7 million ($13.7M), slightly above ROTH's estimate of $13.4M. The New Jersey-based company spent $7M during the quarter, right around ROTH's forecast of $6.9M.
Gross margin during Q1 FY23, however, was lower than ROTH expected, coming in at 48.7% versus 52.5%. This led to a gross profit that was about $350,000 under ROTH's estimate. The net earnings per share (EPS) loss for the quarter was a miss at $0.02; ROTH projected an EPS gain of $0.01.
"Revenue strength was offset by lower gross margins, which prevented bottom line upside and slightly reduced our FY23 and FY24 EPS targets," Henry wrote. Revised targets are $0.15 and $0.40, down from $0.20 and $0.45, respectively.
On the positive side, Champions reiterated its guidance of about 20% revenue growth for FY23.
"This is particularly impressive given that the software-as-a-service business has yet to make meaningful contributions," wrote Henry.
Despite projected revenue growth and based on an expected slight drop in Champions' FY23 profit, ROTH lowered its target price to $15 per share from $16 on the biotech. Its current share price, in comparison, is about $7.91.
|Want to be the first to know about interesting Technology and Healthcare Services investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.||Subscribe|
1) Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with: None. Please click here for more information.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
6) This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.
Disclosures For Roth Capital Partners, Champions Oncology Inc., September 21, 2022
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures: ROTH makes a market in shares of Champions Oncology, Inc and as such, buys and sells from customers on a principal basis. Within the last twelve months, ROTH has received compensation for non-investment banking securities-related services from Champions Oncology, Inc.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report.
Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH.