MERUS LABS INTERNATIONAL INC T.MSL

RE:Peter hodson

[lscfa]

Merus is the cheapest pharma out there. Mgmt reaffirmed guidance of ebitda of $35 million. So mkt cap is only 6x ebitda. Hudson also uses the wrong revenue number like the rest of the market. 


"Revenues from Sintrom during the three months ended June 30, 2015 were $2,802,184.  During the current period, the Company recorded Sintrom revenues in the statements of operations entirely on a net basis, whereby revenues were recorded net of cost of goods and selling expenses, subject to a transition arrangement whereby Novartis continues to provide certain sales and distribution functions while the parties work through the process of transferring the necessary marketing authorizations.  Had the Company recorded Sintrom on a gross basis, revenues and cost of goods would have been higher by $3,873,014."

Craigbad wrote: Further evidence of share price decline, do not add at these levels, unbiased opinion from top analyst

5i Research Answer:

We think MSL is OK, just expensive. Insiders own 7% and it is growing nicely. It does have a fair amount of debt, which adds risks.

Growth was decent though in its last quarter, with sales up 32% and EBITDA up 65%. The pipeline looks good and the company reaffirmed guidance. With less than $10 mm in sales in the quarter, though, investors are looking at its $214 million market cap and are deciding it is too expensive. We think it has potential, looks better after the drop, and would hold a position but not add to one.