Posted on November 24, 2020 by Aaron Warwick
Milestone Scientific (MLSS) ended yesterday, November 23, up 20% on the day. As noted in a recent post in our Featured Company section of Breakout Investors, the stock began the day strong, up 10% in the morning alone. Notably, this move up was on about triple the average daily volume. Today, the stock has given back a few percentage points, which I have used as an opportunity to increase my position. Frankly, I was extremely impressed with their progress and guidance on the Q3 call, and surprised the stock did not immediately react. In conducting additional due diligence after the call, I am even more bullish than before.
Why am I so bullish? A number of reasons, including:
(1) As noted on the call, MLSS has increased the number and scope of demos and trials at a number of hospitals for its CompuFlo/CathCheck products.
(2) I am told MLSS may close some CompuFlo/CathCheck deals and announce them to the market prior to EOY.
(3) My research indicates that even if MLSS closes only a few of these deals, they would be large enough in size, and indicative enough of coming broader market acceptance, that the wins should be material to shareholder value.
(4) MLSS’s strategy has been to target prestigious hospitals/institutions and/or hospitals that are part of much larger networks. Consequently, any wins they may announce this year could lead to much larger wins in 2021, as the other hospitals in the network are more likely to begin their own trials.
(5) In addition to the success on the medical side of their business, the dental business rebounded much more strongly in Q3, and so far in Q4, than management expected. Besides dentist offices staying open during this current wave of the pandemic, MLSS is also seeing a nice tailwind from a Russian distributor renewing a three-year contract with MLSS that will result in annual increases from that distributor to the tune of 20-25%.
For additional info on MLSS, check out my Seeking Alpha article on the company.
Disclosure: I am long MLSS. I wrote this article myself, it expresses my own opinions, and I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.