CDMO - Laughing Water Capital - Avid Bioservices: A Few Years Away From Large Relatively Sticky FCF

2024-04-21 07:25:00 ET

Summary

• Avid recently experienced one of the worst "own goals" that I have ever seen in public markets, but despite this blunder and resultant stock pullback, the long-term thesis is very much intact.
• Avid is still on their way to filling up their $400M in revenue capacity, and they will still likely achieve low 30% EBITDA margins when they do.
• With shares presently around $7, I think there is plenty of upside left.

The following segment was excerpted from this fund letter.

Avid Bioservices (AVID)

Avid is our disposable biologic drug substance CDMO. Like Lifecore, Avid is set to benefit from tremendous operating leverage tied to filling recently installed capacity. However, Avid recently experienced one of the worst "own goals" that I have ever seen in public markets. Despite this blunder and resultant stock pullback, the long-term thesis is very much intact....

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