More experts are coming around to the upside potential of Unilife Corporation (UNS), with Foster Stockbroking initiating coverage on the stock with a “buy” recommendation following a site visit to its Pennsylvania plant.
Unilife, which is an Uncapped 100 stock, develops one-use pre-filled syringes that have been described by the stockbroker as being a “game-changer” for the injectable devices industry.
The company’s business model is also a cut above most as Unilife is forecast to generate strong operating margins of around 30% to 40% that is backed by long-dated contracts of over 10 years.
A business like this should be trading on a price-earnings multiple premium of around 25 times, according to Foster.
Management is believed to be close to announcing its first commercial order for the syringe and Foster has a price target of $1.50.
The stock, which is dual listed in the US and Australia, is trading flat at 63.5 cents this morning on the ASX.