Injecting support into Unilife

Foster Stockbroking has begun coverage of Unilife with a "buy" recommendation after visiting the company's plant in the US.

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.  

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