In the world of biotechnology, fortunes can change in the blink of an eye. Avid Bioservices (USA Stocks: CDMO), a key player in the healthcare sector, has been grappling with a challenging financial landscape. With a negative profit margin of 0.08 and an operating margin of -0.44, the company has been struggling to maintain its footing. The company's cash position stands at $38.5M, while its free cash flow has experienced a loss of $90.5M. Amid these circumstances, investors might be contemplating diversification. IDEXX (USA Stocks: IDXX) emerges as a potential candidate for diversification, offering a fresh perspective in the same sector. Many prudent traders are steering clear of the biotechnology sector. However, it's worth taking a closer look at Avid Bioservices to understand its position relative to IDEXX Laboratories and similar companies. We will concentrate on comparing the competitive aspects of both Avid and IDEXX.
Out of tens of thousands of stocks, funds, and ETFs that trade on global exchanges each represent an individual company which you can analyze using comparative analysis. To determine which one of the two entities, such as Avid or AnaptysBio is a better fit for your portfolio, analyzing a few basic fundamental indicators is a good first step.
How important is Avid Bioservices's Liquidity
Avid Bioservices
financial leverage refers to using borrowed capital as a funding source to finance Avid Bioservices ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Avid Bioservices financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Avid Bioservices' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Avid Bioservices' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Avid Bioservices's total debt and its cash.
Correlation Between Avid and AnaptysBio
In general, Delisted Stock analysis is a method for investors and traders to make individual buying and selling decisions. Stock correlation analysis is also essential because it can help investors realize that they may not be as diversified as they think. Risk management strategies are usually required to make sure all portfolios are properly aligned against their risk tolerance level. You can consider holding Avid Bioservices together with similar or unrelated positions with a negative correlation. For example, you can also add AnaptysBio to your portfolio. If AnaptysBio is not perfectly correlated to Avid Bioservices it will diversify some of the market risks out of the positively correlated stocks in your portfolio. However, the disadvantage of this sort of hedging is that it can potentially affect your investment returns throughout market cycles. When Avid Bioservices, for example, performs excellent and delivers stable returns, the negatively correlated position you locked in as a hedge may drag your returns down.
Are you currently holding both Avid Bioservices and AnaptysBio in your portfolio? Please note if you are using this as a pair-trade strategy between Avid Bioservices and AnaptysBio, watch out for correlation discrepancy over time. Relying on the historical price correlations and assuming that it will not change may lead to short-term losses. Please check
pair correlation details between CDMO and ANAB for more information.
Breaking it down
Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include products or services discounts, promotions, as well as early payments on invoices or services rendered in advance.
Revenue Breakdown
Lets now check Avid Bioservices revenue. Based on the latest financial disclosure, Avid Bioservices reported 149.27
M of revenue. This is 98.04% lower than that of the Biotechnology sector and 79.91% lower than that of the
Health Care industry.
The revenue for all United States stocks is 98.42% higher than that of the firm. As for IDEXX Laboratories we see revenue of 3.66
B, which is 392.79% higher than that of the Health Care
| CDMO | 149.27 Million | 3.28 |
| Sector | 742.91 Million | 16.32 |
| IDXX | 3.66 Billion | 80.41 |
Diversification is the spice of investment life. Avid Bioservices (CDMO) investors may want to consider diversifying into IDEXX (IDXX) to potentially enhance their portfolio performance. Despite Avid's market capitalization of $400.94M and a book value of 2.905, the company has been grappling with a negative operating margin of 0.44 and a quarterly revenue growth decline of 0.27. On the other hand, Avid's potential upside of 9.97 and a target price of $12.25 suggest a promising future. However, with a probability of bankruptcy standing at 47.35%, diversification into a stable company like IDEXX could be a prudent move. .
Is Avid Bioservices growth feasible after the decline?
Avid Bioservices' recent Treynor Ratio of 0.07 suggests a low reward for the
systematic risk investors undertake. This implies potential growth, but the risk of a price drop cannot be overlooked. Investors must evaluate the risk-reward balance, given the company's uncertain growth prospects amid potential downturns. Avid Bioservices exhibits above-average volatility, and understanding these market trends can aid in market timing. Proper use of volatility indicators allows traders to gauge Avid Bioservices' stock risk against
market volatility during bullish and bearish trends. The increased volatility in bear markets can affect
Avid Bioservices' stock price and stress investors as their share values drop, often prompting portfolio rebalancing with diverse financial instruments.
Despite Avid Bioservices' recent decline of over 3 percent, the stock still holds potential for investors. The analyst target price estimated value stands at
$19.25, with the highest estimated target price reaching
$21.37. This suggests a possible upside price of $12.9, which is a significant return for investors. The analyst overall consensus is a 'Strong Buy', with 3 strong buys, 1 buy, and 1 hold. While there is a possible downside price of $0.73, the valuation real value of $9.43 is higher than the current valuation market value of $6.34. Therefore, despite the recent dip, Avid Bioservices could still be a viable investment option. .
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Vlad Skutelnik is a Macroaxis Contributor. Vlad covers stocks, funds, cryptocurrencies, and ETFs that are traded in North America, focusing primarily on fundamentals, valuation and market volatility. He has many years of experience in fintech, predictive investment analytics, and risk management.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Avid Bioservices. Please refer to our
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