BIOQUAL, Inc.  (BIOQ)  provides research, development, consulting, and testing/assay services to commercial clients and government laboratories in the United States.  We are coding BIOQ as a GeoBargain on the radar at $13.45; shares are up nearly 50% since our initial tier one pink research note from 3/10/2014. However, we never established a position  at that  time because we wanted to wait and see if the company was in position to consistently grow top and bottom line on a near term  quarterly basis as the company integrated a key acquisition into its operations.

Meaningful Growth for 2015

After further due diligence, we think 2015 will be a year of meaningful growth as early signs of its Q1 2015 results indicate. (fiscal year ends in May)

  • Q1 2015 revenues of $6.5 million vs $4.9 million in the prior year
  • Q1 2015 EPS of $0.49 vs $0.19 in the prior year

Additional Reasons for optimism:

  • Company will benefit from full year of key acquisition being integrated
  • The company has joined the global plight to fight ebola, quote from letter to shareholders:

“The additional capacity allows BIOQUAL to continue to actively pursue increasing and emerging opportunities that require capability for in-vivo evaluation of the efficacy of vaccines and other treatments for infectious agents. One example is the immediate and urgent emphasis on Ebola.”

  • Bullish commentary from letter to shareholders:

“Given that BIOQUAL has had a productive fiscal year 2014 and that fiscal year 2015 will have the benefit of a full year’s contribution of revenues from the ABL acquisition, plus possible continued increases in studies of infectious disease vaccines and treatments, BIOQ believe that there are good reasons to anticipate an even better performance in fiscal year 2015”

  • BIOQ has trailing EPS of $1.27. As stated in our original note, we will continue to use a  P/E multiple of 20 on trailing EPS which translates to a near term price target of $25.40

Caveats:

  • Shares are extremely illiquid, building a meaningful position will be challenging
  • The company is not as communicative with shareholders as we would like them to be – an issue we are bringing up with management.

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