PetVivo Enters Into A Definitive Agreement For Lead Therapy
The market conditions aren’t screaming “buy growth stocks now” at us but that doesn’t mean all growth stocks, like PetVivo (OTCMKTS: PETV), are or will suffer the same afflictions. PetVivo caught our attention because of two things; its market and a new deal to market its lead therapy. PetVivo is a biomedical devices company focused on animal health which is a rapidly growing segment of the American economy. The company is focused on “equine athletes and companion animals” and is currently marketing a single therapy called Spryng. Spryng is an osteo-cushion made from thousands of tiny microcells and is being used to replace missing cartilage and provide a scaffolding for other types of tissue repairs.
The agreement is with MWI Animal Health, a nationwide distributor of animal health products to veterinarians and retail businesses. The agreement is for MWI Animal Health to inventory, market, and promote Spryng to its customer base which we view as incredibly bullish. MWI Animal Health is a subsidiary of AmerisourceBergen which is itself a leading distributor of medical and pharmaceutical products in America and Internationally. The deal should not only boost sales of Spryng but also opens the door for new product lines as they become available. PetVivi is boasting a pipeline of 17 devices that should begin hitting the shelves
At Least One Analyst Sees An Opportunity In PetVivo
Osteo-care is a multi-billion dollar opportunity within the pet care industry. The estimated value of US veterinary care and devices is estimated at $11 billion in 2021 with high-single-digit growth in the time since and the same forecast for the foreseeable future. Within that, it is estimated that a quarter of all dogs and 50% or more of all horses suffer from some form of joint or osteoarthritis condition that could be treated with Spryng and/or one of the many pipeline products in development.
And there is at least one analyst who views this stock as an opportunity although we think the number will grow once revenue and earnings are established. That analyst is ThinkEquity which rates the stock a Buy and gives a price target of $7. That target was set at the end of 2021 and implies about 285% of upside for the stock. In our view, the $7 target is a bit low but understandable given the age of the business and budding support from the institutions. The institutional activity has been mixed over the past year and is net-bearish but there are a few things to consider. The first is the institutions hold about 14% of the stock, the second is the selling was done in Q1 by a single firm, and the third is that Q2 activity turned bullish. The latest transaction is by Vanguard Group which upped its holdings to 2.31% of the float.
The Technical Outlook: PetVivo Bottoms As Sales Begin
PetVivo began sales of Spryng in the 2nd quarter of fiscal 2022 and the price action has been trying hard to reverse course ever since. The FY Sales came in well below expectations but this is due to a slower-than-expected roll-out of Spryng. Assuming the deal with MWI Animal Health works out as expected, we see revenue ramping significantly as soon as the current fiscal quarter and then growing along with the broader pet care market. Turning to the chart, the stock is bottomed at the $1.25 level and is now confirming support at a higher level. The new support is at the $1.50 level and could result in a rebound up to the $2.50 to $2.75 level. If these levels can be broken we see the stock moving up into the $4.00 to $5.00 range by the end of the year.
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