Monday, August 19, 2013

Biosensors

Biosensors: Biosensors has been buying back share since Nov 2012. In the current program it can repurchase as much as 171m shares, and it purchased 9.3m shares last week at $0.87-0.89 per share. We believe it would continue to buy back shares if the share price remains weak. The Chairman also purchased 8.6m shares in late Jul, which also endorses the current share undervaluation. CS have cut its EPS forecast for lower margins due to shrinking licensing revenue. House believe the current share price weakness provides an attractive entry point with 42% upside, with the potential on-going share buy back as downside protection. Major risks include the unexpected deterioration of licensing revenue from the Japan market and further ASP erosion in the China market. CS maintains OUTPERFORM for Biosensors with TP $1.25.

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