Your anecdotes about developments in the competitive landscape are insightful, so thank you for making them.
When it comes to investing, there are two things to contemplate:
1. The prevailing circumstances facing the company (and the industry in which it operates) - which is where you have added colour, and
2. How such a company is priced for those prevailing circumstances.
In the case of MVF the change in the circumstances occurred when the specialist in question left the business. That's the point in time that the value -impairment occurred.
That the stock price has rallied strongly since the release of the interim result, and that its valuation is still only around 12x P/E, even after the recent rally, suggests that the impact of Dr LB is already, as the investment industry lexicon goes, "factored into the share price".
Unless, of course, DR LB's new competitive positioning somehow manages to siphon away some $4m or $5m of MVF'a current $22m pa of after-tax profits.
Because that's the extent of profitability leakage that looks like is being currently factored into MFV's valuation.
Now, based on industry norm profit margins, $4m or $5m of profit would equate to around $35m in Revenue taken from MVF by Dr LB's new East Melbourne practice.
(And given that MVF ceding revenue would not be the sole source of market share gains by Dr LB's new facility; so means Dr LB's new Melbourne practice will need to be writing somewhat more business than just $35m, probably in excess of $40m).
Now, I'm no IVF practitioner, but I think that for her Melbourne clinic to even do anywhere close to $7m or $8m pa in annual revenues will be a very significant (and probably unprecedented) achievement. Correct me if I'm way off the mark.
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MVF Price at posting:
$1.08 Sentiment: Buy Disclosure: Held
