I bought Genovis (GENO) on 28 May at 18.10 SEK because:
I’ve been on the lookout for a lesser known growth stock to spice up my otherwise quite conservative portfolio and chose to bet on the Swedish enzyme maker Genovis for multiple reasons. The 1.15 billion SEK market value for a company with only 34,5 million SEK in annual sales (2018) is sky high, but if one takes a proper look at how both the business and the numbers have developed from quarter to quarter, it starts to seem clear that Genovis is entering a rapid growth phase while becoming profitable at the same time.
Genovis’ business model is based on producing enzymes that help large biotech and pharma companies develop and test biological drugs quicker and more efficiently. Given that the market size for pharmacological drugs is somewhere close to a trillion dollars a year and big pharma companies spend enormous bucks on R&D, Genovis, with its clear value proposition, certainly holds exponential growth potential.
Genovis’ products are used in several stages of the drug development value chain by an impressive lineup of customers, including practically all major big pharma companies from Johnson & Johnson to Pfizer. The sales of Genovis’ enzymes have surged over the past three quarters and in the first quarter of 2019 net sales grew by about 91 percent compared with the corresponding period in 2018. Operating earnings have also improved significantly and Genovis has now achieved an operating profit for three consecutive quarters.
Currently Genovis’ product lineup consists of 13 products, with the latest product launch taking place just yesterday. A particularly satisfying piece of news, as all the previous Genovis products have seemed to find their place on the market and the sales have grown steadily across the whole product portfolio.
As a stock, Genovis is currently extremely speculative, but the company has many things going for it:
The balance sheet is in a decent shape.
Genovis has a solid product portfolio. Plus a customer base with pockets as deep as the Mariana Trench.
The fundamentals are progressing rapidly every quarter.
Genovis has validated its road to profitability.
Genovis is becoming a lucrative acquisition target for multi-billion dollar companies.
I couldn’t resist the temptation to put a little skin in the game.
The stock has already traded above 21 SEK, so I expect Genovis to break out from the 20 SEK level very soon if they keep firing on all cylinders. I’m in this for the long term and hope Genovis produce exponential returns in five to ten years.