OTC:BSEM
READ THE FULL BSEM RESEARCH REPORT
BioStem Technologies, Inc. (OTC:BSEM) is a leading innovator focused on harnessing the natural properties of perinatal tissue in the development, manufacture, and commercialization of allografts for regenerative therapies. The company states its mission is “to discover, develop and produce the most effective regenerative medicine products in the world,” and we believe that the company is well on its way to achieving that goal—providing to investors what we believe is an opportunity to invest in a company that is both providing a vital service to the human population and providing economic value to shareholders when doing so.
Investors are increasingly understanding our positive view of BSEM as the stock has experienced a rapid rise over the past year, but we believe the stock is still undervalued. The company released its 1Q2024 earnings results, which vastly exceeded estimates as revenue growth accelerated, and the company posted its first quarterly profit. Other details include:
• Revenues of $41.9 million represented a nearly 71-fold increase over the year-ago period.
• Margins improved to 95% and on the call following the release, management noted that margin rate should be continued at roughly the current level.
• The company announced that the US Patent Office has prioritized the examination of the patent for BioREtain processing technology.
• The company also reminded investors that it has retained an experienced clinical research professional to lead BioStem’s Diabetic Foot Ulcer and Venous Leg Ulcer trials.
o These trials are an attempt to proactively address potentially changing reimbursement requirements by Medicare Administrative Contractors.
▪ Proposals have been made to sharply cut the number of approved treatments and, while the industry is largely fighting against such a drastic cut, BSEM is preparing for whatever decision ultimately comes down.
• The company posted its first positive net income reading in a quarter by earning just over $4.4 million.
• The company also recently announced that an extensive two-year audit had been completed in preparation for moving BSEM to a national exchange.
o On the call following the release, management noted that the move was likely to be sooner rather than later.
These results are further evidence, in our view, that the medical community is increasingly realizing the benefits and superiority of the BioStem products and increasingly realizing the benefits patients can get from having access to those products. Our belief is that now that BioStem has a solid foothold in that tough to break into community, the acceptance and use of the company’s products will continue to accelerate as we’ve begun to see over the past couple of quarters.
Summary
We reiterate our belief the BSEM is still underpriced even after its recent move higher and continues to represent a good opportunity at recent prices for investors to get in before what we believe will be a more aggressive move higher in the not-too-distant future. The vision management has for the company’s products and the focus they are using to deliver results are encouraging and are now being rewarded by increased demand. As such, we suggest investors with a modestly higher risk tolerance take a look at BSEM.
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