PEB - Pacific Edge Ltd

[Harrie]

I guess what we also need to take into account is that DD has a S...load of shares. Now that he has no direct connection with management, and is not a director, he is not required to disclose any acquisition or disposition of shares.

Some of the current decline in SP given that its a pretty thin market could have been a slow sell down of his shares, however I suspect , as I have noted a couple of months ago, its more to do with very poor communication which can only be based on an unimpressive growth rate to report.

The report is positive enough though, plenty of potential, but that needs to be exploited fairly soon to keep the instos engaged. Just one more big medical facility starting to adopt in a meaningful way could see the SP move upward 50%+ in a day.

[Greekwatchdog]

For Bar update 28/03.

Pacific Edge's (PEB) share price is down -30% year to date, we view this as unjustified. While we acknowledge the marketforces at play (high growth company with long-dated cash flows) we think this is overdone given the lack of newsflow andcontinue to see PEB as offering an attractive risk/reward proposition. At 22x 12m forward and 11x 24m forward EV/salesPEB is by no means 'cheap', however, over the medium-term we expect the stock to remain newsflow driven, which is likelypositively skewed. Having a definitive view on materiality and timing of newsflow is a challenging task but in this report weoutline the near-term catalysts that are likely to drive the share price and reiterate our OUTPERFORM rating.

NZX Code PEB
Share price NZ$0.93
Target price NZ$1.35 (from 1.60)
Risk rating High
Issued shares 804.4m
Market cap NZ$748m
Avg daily turnover 827.6k (NZ$1,026k)
Financials: Mar/ 21A 22E 23E 24E
NPAT* (NZ$m) -14.4 -18.4 -16.4 -7.9
EPS* (NZc) -2.0 -2.4 -2.0 -1.0
EPS growth* (%) 38.5 -19.2 15.7 51.5
DPS (NZc) 0.0 0.0 0.0 0.0
Imputation (%) 0 0 0 0
*Based on normalised profits
Valuation (x) 21A 22E 23E 24E
PE n/a n/a n/a n/a
EV/EBIT n/a n/a n/a n/a
EV/EBITDA n/a n/a n/a n/a
Price / NTA 26.6 6.5 8.0 8.7
Cash div yld (%) 0.0 0.0 0.0 0.0
Gross div yld (%) 0.0 0.0 0.0 0.0

What's changed?Checking the pulse — assessing near-term catalystsPEB's share price is down -30% year to date. It has lagged global biotech peers recently and we think, given the lack of newsflow, thisis unjustified. Over the near/medium-term we see a number of catalysts that have the potential to drive the share price.Valuation an inherently difficult taskFinding an appropriate valuation benchmark is difficult. The global biotech/genomic universe comprises idiosyncratic businesseswhich are all at differing stages in their respective revenue ramp paths. At 22x 12m forward and 11x 24m forward EV/sales wewouldn't classify PEB as 'cheap', however, when accounting for PEB's lifecycle stage, its superior forecasted revenue growth andcurrent balance sheet position we don't view this as stretched.N E W Z E A L A N D E Q U I T Y R E S E A RC H H E A LT H C A R E C A N C E R D I AG N O S T I C S2 8 M A RC H 2 0 2 2NZX Code PEBShare price NZ$0.93Target price NZ$1.35 (from 1.60)Risk rating HighIssued shares 804.4mMarket cap NZ$748mAvg daily turnover 827.6k (NZ$1,026k)Financials: Mar/ 21A 22E 23E 24ENPAT* (NZ$m) -14.4 -18.4 -16.4 -7.9EPS* (NZc) -2.0 -2.4 -2.0 -1.0EPS growth* (%) 38.5 -19.2 15.7 51.5DPS (NZc) 0.0 0.0 0.0 0.0Imputation (%) 0 0 0 0*Based on normalised profitsValuation (x) 21A 22E 23E 24EPE n/a n/a n/a n/aEV/EBIT n/a n/a n/a n/aEV/EBITDA n/a n/a n/a n/aPrice / NTA 26.6 6.5 8.0 8.7Cash div yld (%) 0.0 0.0 0.0 0.0Gross div yld (%) 0.0 0.0 0.0 0.0Earnings: FY22/FY23/FY24 revenue downgraded -NZ$1.1m/-NZ$4.6m/-NZ$5.8mTarget price: Decreased to NZ$1.35 (from NZ$1.60)Kaiser Permanente ramp up: Recent results have been plagued by a number of systems issues. Significant growth is alreadycaptured in our forecasts (with revenue ramping materially from FY23E) but we expect signs of success to be perceived positively.New commercial agreements: There remains a long runway for growth with a large untapped potential market. New commercialagreements, particularly for large accounts is a key catalyst.Stronger mention/inclusion in guidelines: A key driver of further product adoption and private payor reimbursement. Having aview on timing/materiality is difficult but catalysts are (1) greater mention in NCCN guidelines, and (2) inclusion in AUA guidelines.Update on strategic direction: New CEO, Peter Meintjes, started in January. We don't expect any wholesale changes in strategybut look for updates on cash utilisation and future aspirations. We assume an update is likely before PEB's FY22 result in late May.FY22 result: Outlook/progress commentary and insight into recent commercial test throughput run-rateFurther clinical evidence: Changing clinical practice is a slow process but the prize remains substantial. While PEB has built arobust body of evidence, expanding this will help support inclusion into clinical guidelines and drive product adoption.

[Harrie]

Well look at that PEB jumps to 97c probably not as a result of the news letter but maybe because the NBR reports that
four bars say the price drop is not justified.

Yeah, that's probably because they have pushed it to their clients in a big way, and don't want to embarrass themselves.

[Brain]

Thanks for posting the above Mr Watchdog. In my opinion FourBars are flying blind just like the rest of us. It all comes down to the selling of the tests and I do not see how any body can predict the speed of the uptake. With this stock we are all punters there are no experts although some pretend to be.

[Minerbarejet]

Just be very pleased that PEB is not still languishing at 7c.

It has a midkine related mate in Oz that is in a similar situation as PEB was.

Midkine is one of the markers in the cxBladder Test.

[Maxtrade]

Well look at that PEB jumps to 97c probably not as a result of the news letter but maybe because the NBR reports that
four bars say the price drop is not justified.

What qualifies as justified or not. They say it's 'unjustified' because they have recently advised fund managers to pump money in at last Cap Raise. They have to say that otherwise they look like they messed up.

There is still a lot of 'hope' built in to current SP at these levels, unknown when 'might' become profitable. Hope for US adoption. Many investors won't see it as a positive investment until they can see some lab test throughput, increases in customer base, medical adoption, growth in revenue, and see profitability at the end of the tunnel. At this stage their is still lot of speculation built into the current SP. The Update was as expected, sugar coating but nothing positively substantial to show any real forward momentum in sales/ adoption. If SP doesn't crest and stabilise above $1.0 on this minor recent rally, then we might see a dip back off SP 1.0 back down to 0.8 range again.

Unfortunately the numbers in May are not likely to look positive. This may be the time the SP takes a dip down off current levels and tests 0.80 again. Until then might see hopefuls hold SP above 0.90. Sad to see what's happening to hopeful holders in AIR this morning. That's what false hope can do, need to trust in the figures and real data when investing (rather than speculating). PEB currently needs some real traction to push it back up into an uptrend over $1. Otherwise inevitable 0.80 will be retested.

[Maxtrade]

What qualifies as justified or not. They say it's 'unjustified' because they have recently advised fund managers to pump money in at last Cap Raise. They have to say that otherwise they look like they messed up.

There is still a lot of 'hope' built in to current SP at these levels, unknown when 'might' become profitable. Hope for US adoption. Many investors won't see it as a positive investment until they can see some lab test throughput, increases in customer base, medical adoption, growth in revenue, and see profitability at the end of the tunnel. At this stage their is still lot of speculation built into the current SP. The Update was as expected, sugar coating but nothing positively substantial to show any real forward momentum in sales/ adoption. If SP doesn't crest and stabilise above $1.0 on this minor recent rally, then we might see a dip back off SP 1.0 back down to 0.8 range again.

Unfortunately the numbers in May are not likely to look positive. This may be the time the SP takes a dip down off current levels and tests 0.80 again. Until then might see hopefuls hold SP above 0.90. Sad to see what's happening to hopeful holders in AIR this morning. That's what false hope can do, need to trust in the figures and real data when investing (rather than speculating). PEB currently needs some real traction to push it back up into an uptrend over $1. Otherwise inevitable 0.80 will be retested.

Got some pretty upbeat buyers on market this morning. Not large volumes so small time retail investors who are eager to jump in and consequently with the low volumes on market pushing SP up considerably. Hope it holds! But more likely once the lower volume buyers push through then day traders will sell for a quick profit and SP will knock back down again. Fingers crossed SP stays up above 1.0.. If not will be interesting where the next dip lays resistance level, if up trending, continuing downtrend, or meandering waiting hoping for some better numbers.

Peak at 1.05. Followed by sell volume stacking up @ 1.04. The ups n downs of traders at play. Wondering if current bids will hold above 1.0 or if they will be withdrawn as the sell volume starts pushing back down as it looks to be now. Without news makes more sense to be sitting back in the low 0.90 range where it was. Interesting to watch. Is that enough buying support to hold, probably unlikely. Will see where close is today.

[Maxtrade]

Got some pretty upbeat buyers on market this morning. Not large volumes so small time retail investors who are eager to jump in and consequently with the low volumes on market pushing SP up considerably. Hope it holds! But more likely once the lower volume buyers push through then day traders will sell for a quick profit and SP will knock back down again. Fingers crossed SP stays up above 1.0.. If not will be interesting where the next dip lays resistance level, if up trending, continuing downtrend, or meandering waiting hoping for some better numbers.

Peak at 1.05. Followed by sell volume stacking up @ 1.04. The ups n downs of traders at play. Wondering if current bids will hold above 1.0 or if they will be withdrawn as the sell volume starts pushing back down as it looks to be now. Without news makes more sense to be sitting back in the low 0.90 range where it was. Interesting to watch. Is that enough buying support to hold, probably unlikely. Will see where close is today.

Cant beat algorhythms in trading these days.Momentum stalled. Sell volume appears out of nowhere, All of a sudden 24 sellers and ~300,000 sharers appear on the sell side. SELL down into the 0.9's again?

[Maxtrade]

Cant beat algorhythms in trading these days.Momentum stalled. Sell volume appears out of nowhere, All of a sudden 24 sellers and ~300,000 sharers appear on the sell side. SELL down into the 0.9's again?

Little pump in dump yesterday selling back down today, 2 x 100,000 sells today after a quick profit take yesterdays pulse.

[850man]

Got some pretty upbeat buyers on market this morning. Not large volumes so small time retail investors who are eager to jump in and consequently with the low volumes on market pushing SP up considerably. Hope it holds! But more likely once the lower volume buyers push through then day traders will sell for a quick profit and SP will knock back down again. Fingers crossed SP stays up above 1.0.. If not will be interesting where the next dip lays resistance level, if up trending, continuing downtrend, or meandering waiting hoping for some better numbers.

Peak at 1.05. Followed by sell volume stacking up @ 1.04. The ups n downs of traders at play. Wondering if current bids will hold above 1.0 or if they will be withdrawn as the sell volume starts pushing back down as it looks to be now. Without news makes more sense to be sitting back in the low 0.90 range where it was. Interesting to watch. Is that enough buying support to hold, probably unlikely. Will see where close is today.

and closing sub $1 today :-(

Needs some actual delivered financial results to breathe any life into PEB's SP