On Wednesday, RBC Capital maintained its Outperform rating on Avid Bioservices (NASDAQ:CDMO) with a steady price target of $8.00. The company reported mixed results for the fourth fiscal quarter of 2024, with revenues slightly exceeding expectations by approximately 2% but EBITDA falling short by roughly 29%. Management introduced revenue guidance for fiscal year 2025, forecasting $160-168 million, which suggests an estimated 17% growth and is in line with consensus expectations.
However, this target is now seen as potentially optimistic given the company's final quarter bookings of $30 million, which did not meet RBC's expected $41 million, and a year-end backlog that showed a modest year-over-year increase of 1%.
Avid Bioservices has expressed confidence in its growth, citing a surge in interest for its newly expanded capacity, especially from large pharmaceutical companies, and positive developments in the gene therapy sector. The company anticipates that margins will improve as capacity utilization increases.
Despite the mixed results, RBC Capital emphasizes the importance of bookings in evaluating Avid Bioservices' future performance and outlook. The firm indicates that it will be looking for a pickup in booking activity over the upcoming quarters to sustain its current rating and conviction in the stock's potential.
In other recent news, Avid Bioservices reported its fourth quarter and full fiscal year 2024 results. The company achieved record quarterly revenue of $43 million, marking an 8% increase year-over-year. However, full fiscal year revenues experienced a 6% decrease, totaling $139.9 million. Avid Bioservices also provided an optimistic revenue guidance for fiscal year 2025, projecting revenues between $160 million and $168 million, suggesting substantial year-over-year growth.
These recent developments are attributed to the launch of the company's new cell and gene therapy manufacturing facility and a trend towards onshoring drug manufacturing in the U.S. The CEO, Nick Green, expressed confidence in the company's performance and future prospects, despite a challenging financial market. Avid Bioservices anticipates a pickup in business in the coming months, with approximately $80 million in interest and activity in their pipeline.
InvestingPro Insights
Turning to real-time metrics from InvestingPro, Avid Bioservices (NASDAQ:CDMO) displays a challenging financial landscape. The company's market capitalization stands at $425.31 million, with a negative P/E ratio of -23.88, reflecting investor concerns about profitability. Additionally, the company's revenue has declined by 2.81% over the last twelve months as of Q3 2024, indicating some headwinds in sales growth.
On the strategic front, InvestingPro Tips highlight that analysts have downgraded earnings expectations for the upcoming period, which aligns with RBC Capital's cautious stance on the company's optimistic revenue guidance for fiscal year 2025. Moreover, Avid Bioservices' current financial position is strained by weak gross profit margins, which stood at 7.47% over the same period, potentially challenging the company's confidence in improving margins through increased capacity utilization.
For investors seeking a deeper dive into Avid Bioservices' prospects, additional InvestingPro Tips are available, providing an extensive analysis of the company's financial health and market performance. Those interested can access further insights and take advantage of an exclusive offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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