Go through the companies presentations. Worldwide, market is about 20 Million tests per year (8M in the US alone).
Revenue will take a while to ramp up, but the POTENTIAL is huge.
All accounts show that HTX's Version 1 is far better than the current test, and HTX's Version 2 will be even better still.
At this early stage, the company is worth a percentage of the potential. But what percentage? That is the problem. How to value this?
In my opinion, the current $20M is not fair value, it is way too cheap. Given a perfect play, the company given time has the potential to be a $5 Billion dollar company (based on taking the majority of the Ovarian cancer diagnostic market - 10M test at $50 a pop - $500M revenue, P.E of 10). On top of this is the prostate cancer dianostic market.
But, most would see this as a perfect outcome. So what percentage is fair value given time and risk? 1% of potential, 5%.... maybe 10%....
Even at a 1 in a 100 shot, fair value would be 1% of $5B, or $50M market cap. 10% would be $500M....
So given we rate HTX somewhere between 1 to 10%..... market cap should be $50 to $500M....
This is rough, but it just reinforces that at the current cap around $20M, we are well and truely undervalued given the upside.
HTX Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
