It is actually quite hard to price Sensera at the moment - Do you price based on blue-sky technology or do you price as per the financials? I think what a lot of investors fail to realise about Sensera is that firstly, its runway to revenue is quite long but secondly, we are just about to enter into a phase whereby a lot of the ground work (R&D with customers, product design and pre-development) is about to fall into place and very quickly. It's like all of a sudden, all the customers in the pipeline are in production which is where revenues will ramp quite significantly.
I have taken a stab, based on 60% margins and a 12.50% YoY increase in operating expenses (management have indicated a circa 60% margin and a 10-15% increase in expenses YoY) to see where Sensera is heading. This is obviously not accurate (tax, dilution etc.) but can give an indication of the potential here.
The difficult part of the exercise is to ascertain what kind of revenue growths we can expect. Can Sensera get to $20m in revenue in FY20? Is $25m possible? Anything above $20m is going to see pretty handsome increases to valuation.
Why I reckon $20m plus revenue is possible? $10.5m to $11.5m forecast only includes the following:
1) 3rd and 4th quarter of this year which yield annualised revenues of close to $15m already
2) 2+ quarters of Zoetis revenue which is ramping up
3) 3 quarters of 1 Abiomed product and only 1+ quarter of 2nd Abiomed product - revenues to ramp quite aggressively as per investor call
4) 12 MEM customers to be in production by end of FY19
5) New verticals including logistics, manufacturing etc.
6) Increased product range and capabilities put into place this year ready for switch in model and reach bigger customers
7) Newly engaged customers will also add to revenue (cost-plus model)
Is PE50 possible? With technology companies - YES definitely. Take for example, Altium, PE is way higher than 50. Same with a lot of other techs.
For now, Sensera is a dog, but things can change very quickly. Once they offer a forecast of FY20 revenues, we will get a much clearer picture of where Sensera is headed.
10 bagger is imo very possible BUT not for the faint hearted.
DYOR.
