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Ryerson Paper Trading Club
Bio Rad Laboratories Inc (NYSE.BIO) – Buy
By: Sahil Duggal, Neil Jonatan,
Rottem Maor, Liam Hennessy
March 21, 2021
Trading Report #18
EQUITY
TRADING
REPORT
Executive Letter
Dear reader,
The purpose of our reports is to demonstrate our executives’ deep knowledge and understanding of investments, the financial industry,
financial indicators, risk management, etc.
All reports are approved, fact-checked and edited by Founding President Neil Jonatan and Co-V.P.s of Finance Rottem Maor and Liam
Hennessy.
Disclaimer: The analyses and conclusions of Ryerson Paper Trading Club (“RPTC") contained in this presentation are based on publicly
available information. RPTC recognizes that there may be confidential information in the possession of the companies discussed in the
presentation that could lead these companies to disagree with RPTC’s conclusions. This presentation and the information contained herein
is not a recommendation or solicitation to buy or sell any securities.
The analyses provided may include certain statements, estimates and projections prepared with respect to, among other things, the
historical and anticipated operating performance of the companies, access to capital markets and the values of assets and liabilities. Such
statements, estimates, and projections reflect various assumptions by RPTC concerning anticipated results that are inherently subject to
significant economic, competitive, and other uncertainties and contingencies and have been included solely for illustrative purposes. No
representations, express or implied, are made as to the accuracy or completeness of such statements, estimates or projections or with
respect to any other materials herein. Actual results may vary materially from the estimates and projected results contained herein.
The sole responsibility for the content of this publication lies with the authors. Its contents do not reflect the opinion of RPTC. RPTC assumes
no responsibility or liability for any error, inaccuracy, omission or comment contained in this publication or for any use that may be made
of such information by the reader.
Sincerely,
Neil Jonatan
Founding President
Rottem Maor
Co-V.P. of Finance
Liam Hennessy
Co-V.P. of Finance
Investment Overview
Key Financials Business Summary
Ticker NYSE: BIO
Bio-Rad Laboratories manufactures and supplies life science research, healthcare, analytical chemistry, and other markets with a range of products and systems used to separate complex chemical and biological materials and to identify, analyze and purify their components. The company has direct distribution channels in approximately 36 countries outside the United States through subsidiaries whose focus is sales, customer service, and product distribution.
Share Price $568.93 (USD) 52 Week Range $309.38 – 689.00 (USD) Market Capitalization $17.13B (USD) LTM P/E 4.50x Return on Equity 48.7% Gross Margin % 56.4%
52 Week Performance Quarterly Revenue ($millions)
$-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
$900.00
Q1
20
16
Q2
20
16
Q3
20
16
Q4
20
16
Q1
20
17
Q2
20
17
Q3
20
17
Q4
20
17
Q1
20
18
Q2
20
18
Q3
20
18
Q4
20
18
Q1
20
19
Q2
20
19
Q3
20
19
Q4
20
19
Q1
20
20
Q2
20
20
Q3
20
20
Q4
20
20
Company Overview
Business Mix Broad Portfolio: Leading Technologies
Geographic Mix
21%
35%
44% APAC
EMEA
Americas
Worldwide
Presence
38%
13%12%
3%
23%
11%
Hospital Labs
Reference Labs
Transfusion Labs
Applied
Academic/Govt
Biopharma
Gene expression
Protein quantitation
Bioproduction
ddfPCR™
Single cell
Quality controls
Immunohematology
Infectious diseases
Diabetes monitoring
Autoimmune
Diversified
Customer Base
PEST Analysis
Political Economic
Social Technological
Bio-Rad Laboratories, Inc. is operating in Medical
Laboratories & Research in more than dozen countries and
expose itself to different types of political environment and
political system risks. The achieve success in such a dynamic
Medical Laboratories & Research industry across various
countries is to diversify the systematic risks of political
environment. Bio-Rad Laboratories, Inc. can closely analyze
legal framework for enforcement, pricing regulations,
industrial safety regulations, and importance of medical
laboratories & research in the country’s economy.
Macro environment factors such as – inflation rate,
savings rate, interest rate, foreign exchange rate and
economic cycle determine the aggregate demand and
aggregate investment in an economy. While
microenvironment factors such as competition norms
impact the competitive advantage of the firm. Bio-Rad
Laboratories, Inc. can use country’s economic factor such
as growth rate, inflation & industry’s economic indicators
such as Medical Laboratories & Research industry growth
rate, consumer spending to forecast the growth.
Society’s culture and way of doing things impact the culture
of an organization in an environment. Shared beliefs and
attitudes of the population play a great role in how
marketers at Bio-Rad Laboratories, Inc. will understand the
customers of a given market and how they design the
marketing message for Medical Laboratories & Research
industry consumers. Social factors that leadership of Bio-
Rad Laboratories need to analyze are gender roles, social
conventions, education standard & level, and environmental
concerns.
Technology is fast disrupting various industries across the
board. The medical industry is fast moving toward
automation led by several bio-tech firms, which has
started a medical revolution. A firm should not only do
technological analysis of the industry but also the speed
at which technology disrupts that industry. Slow speed
will give more time while fast speed of technological
disruption may give a firm little time to cope and be
profitable.
Technical Analysis
NYSE: BIO
Ascending Channel: An ascending channel is the price action contained between upward sloping parallel lines. Higher highs and higher lows
characterize this price pattern. When the price hits the bottom of the channel, cover your existing short position and/or take a long position.
Bollinger Band: The stock was close to the lower band indicating it was oversold but recently it has been gaining strength approaching the moving
average. Future forecast involves the stock going above its moving average and increasing to the upside.
Upper Channel Line
Lower Trendline
Technical Analysis
NYSE: BIO
Relative Strength Index: The RSI is in relative oversold territory from the last price highs. Bio Rad has been relatively stable as it is consolidating
around the $560.00 range. This current price range is also a strong level of support for the company.
Elders Force Index: The force index is a technical indicator that measures the amount of power used to move the price of an asset. Large force
index readings are associated with very strong price moves and very high volume. Bio Rad stock is passing the force index median line indicating
a potential large movement in volume and price indicating a good buying opportunity.
Investment Valuation
Comparative Valuation
The comparative valuation provides us with price targets for the next twelve
months basing it on TEV/Forward Total Revenue. Our base case is very
conservative as the street consensus has a median upside of 32.6%. That
upside is what we have received in our optimistic case. Hands down this is a
buy as several analysts believe this stock is going to outperform, with only
one analyst saying it will underperform.
Recommendation Thesis Summary
As a student run investment club, RPTC’s purpose is to recommend investments in companies that are positioned to grow in value and sell those that have a negative outlook.
Our thorough analysis has led us to the conclusion that Bio-Rad Laboratories is going to increase in price in the medium and long term. As it is an essential business that will continue to operate and generate revenue in almost all cases even during a pandemic.
Conditional BUY at $560.00
Implied Return on Investment (Buy): 20.54% - 29.46%
Risk Management Strategy Target Visualization
Optimal Execution Price: $560.00
Stop Loss: $500.00
Targets:
• 1st – $675.00 (20.54% gain)
• 2nd – $725.00 (29.46% gain) Risk/Reward Ratio: 12.00%: 20.54% - 29.46% Portfolio Allocation: 10%
$500.00
$560.00
$675.00
$725.00
Citations (1) Yahoo Finance
https://finance.yahoo.com/quote/BIO/history?p=BIO (2) Capital IQ
https://www-capitaliq-com.ezproxy.lib.ryerson.ca/CIQDotNet/Comps/Comparables.aspx?compsId=-3000&companyId=255743&tempId=1&tab=4&statekey=429d77a66e65496bb6ebd19644845006
(3) CNN Business https://money.cnn.com/quote/forecast/forecast.html?symb=BIOINDIGO 9 DIGITAL