44 Best Stock Pitches (11th-17th May) ✅
From biotech to tin mining. Find your next idea >
Welcome to another edition of the Capital Employed Newsletter.
Latest interviews with fund managers sharing their best ideas…
#131 - Wengang Ji (Trigram Partners) 📗
#130 - Andrew Marasco (Matrice Capital) 📗
#129 - Patrick O’Brien (Jackson Peak Capital) 📗
BEST IDEA AWARD FOR THIS ISSUE 🏆
McIntyre Partnerships on QuidelOrtho Corporation 🇺🇸
QDEL is a healthcare diagnostics tools company focused on routine blood testing, primarily at hospitals and central labs, and point-of-care (POC) respiratory testing.
Its business is a razor/razor blade model, where machines are sold or leased up front for minimal cost (i.e., “the razor”), and then customers commit to purchase consumables at high gross margins (the “razor blades). ~95% of sales are consumables.
The basic pitch is that QDEL is a growing, stable business where one large issue, the end of the COVID pandemic, has collided with a series of smaller, largely one-time problems to create a significant mispricing.
To put the opportunity in perspective, I think QDEL can earn ~$4 in 2028 FCF/sh. with 2-3x net leverage. Comparable companies such as Siemens Healthineers, ABT, Roche, and DHR all trade >20x P/E. QDEL is presently trading $11. We can debate multiples, but QDEL shares represent significant value if the business can return to steady growth.
A 20x multiple would yield $80.A round-up of the best ‘fresh-off-the-press’ stock pitches…