Thursday, 12 May 2011

Respected Analyst Rates Neptune & Acasti a 'Buy'

NTB - TSX V) (NEPT - NASDAQ)
Basic Shares: 48.2 million
Fully diluted: 53.9 million

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BUY sums up in one word the conclusions by Versant Partners analyst, Doug Loe, in an exhaustive, 87-page initiating coverage report on Neptune Technologies and a small report on its 60% owned subsidiary, Acasti Pharma.

Of meaning to investors and those watching the company is his one-year target price of $6 dollars on Neptune and $3 dollars on Acasti.

NTB’s May 11th closing price was $2.80 (CDN) and Acasti was $1.01.

Unfortunately, we can’t publish the Versant Partners’ report, which was subtitled: “Krill oil franchise poised to outperform in multiple consumer and medical markets”. Here, however, are a few points from the report.

The Versant Partners report pinned its share price targets not only on the business Neptune has in hand, but also its future. With NTB’s fiscal year end being February, Mr. Loe is calling for:

* F2012 revenues of $21.79 million and earnings $4.34 million ($0.09 EPS)
* F2013 revenues of $32.39 million and earnings of $8.81 million ($0.17 EPS)
* F2014 revenues of $45.37 million and earnings of $15.69 million ($0.30 EPS)

He cited management plans to meet forecasted demand by increasing current plant production from 130 thousand kilograms of krill oil per year to 430 thousand kilograms per year by 2015, a 300% production increase.

But by far, the biggest foundation Mr. Loe constructed on which to base his conclusions came from his meticulous research into the product itself – Neptune Krill Oil or NKO as it is branded on the market - and all its further refined products, such as Acasti’s drug candidate called ‘CaPre’.

Along the way, he also gave a significant nod to the functional food alliances Neptune developed with Yoplait – owned 50% by General Mills – and the food manufacturing behemoth, Nestle.

Mr. Loe wrote that both Yoplait and Nestle “should conclude development,” of their research into Neptune Krill Oil by the end of this year.

Assuming all goes well, Mr. Loe estimated that the sales of krill-oil infused food products by these giants would be a major revenue driver for Neptune in 2013/14.

A very recent financing has left Neptune with an estimated $17.6 million in the bank and total debt of $5 million.

Should you have a question of Mr. Loe, you can email him at dloe@versantpartners.com but be patient as his inbox tends to be constantly overflowing.