Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: Here’s the thesis I shared with another great investor here on X a few months ago — and to answer your question, it has to do with $MEDP book-to-bill ratio, along with the strong beat on revenue

“MEDP is starting to pique my interest a bit

A nice way to catch future growth in biotech space (future CRO growth expected to compound >10% through 2029) without relying on a blockbuster drug or long biotech cycles since MEDP offers picks & shovels by supporting R&D process regardless of trial outcomes

The company has been a strong compounder since IPO & strong FCF & EPS CAGR along with excellent return metrics

Main issue right now is that the company’s book to bill ratio fell substantially below 1.00x since they IPO’d and the question becomes:

Is this due to a sector slowdown coupled with cancellations & some competitions that will likely stay this way OR is it a short-term industry slowdown that will turn in the next year or so

If they can get this ratio back above 1.00x, indicating future deal values greater than current revenue, then it’s >$400 stock again

Huge buyback plan as well and they buyback aggressively during moments when their valuation is near the lowest end of their historical range (22x - 25x)

It’s an interesting one, with some uncertainty

Insiders (I believe CEO) still owns >15% of the company as well

Small to medium sized biotech companies don’t have enough funding to run their own trials

So they hire CRO’s (contract research organization) to conduct their trials (Phase I - IV) & also help them remain compliant with regulatory laws etc in whichever country the trials are being done

So they are essentially offering a service & taking advantage of future biotech growth / demand without necessarily relying on the results themselves

That’s why it’s such an interesting business .. the potential for continued margin expansion is also bullish and their buyback plans do not count towards the company’s guidance (as they state on their financial statements) so even if there’s a temporary slowdown (lower book to bill ratio) they may still be able to grow EPS a bit through share buybacks + continued margin expansion

The main issue is that their book to bill ratio dropped below 1.00x and is at its lowest since IPO

e.g. they get $500M in new quarterly bookings but report $400M in quarterly revenue so the ratio is 1.25x

The global CRO market is expected to be valued at approximately $85.88 billion & projected to grow at a compound annual growth rate (CAGR) of 8.27%, reaching $127B by 2030”
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Dimitry Nakhla | Babylon Capital®
RT @QualityInvest5: MASSIVE kudos to Dimitry for calling out $MEDP which is now up double since last year

This is not an irregular occurrence for his callouts

One of the best pages to follow on FinTwit if you already haven’t 😉👇 https://t.co/xsAQePjSvN

TWO days ago I suggested $MEDP becomes an interesting consideration at $330💵 (~9.5% below that day’s price)

Yesterday shares of $MEDP fell ~10%, reaching my target ✅

As I stated in the most recent analysis:

“As you can see, $MEDP appears to have attractive return potential if we assume >30x earnings, a valuation that may not be justified by its growth rate & one that’s subject to multiple compression if the growth rate slows (which is expected for 2025-2026 vs 2018-2023)

Today at $365.70💵 $MEDP appears to be a “hold”

I’d consider $MEDP closer to $330💵(~26.70x NTM EPS), or roughly 9.5% below today’s share price”
_______

Stay tuned for today’s updated valuation analysis on $MEDP 📝

#stocks #investing - Dimitry Nakhla | Babylon Capital®
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Clark Square Capital
One of the cheapest stocks I own is $BWMX -- Betterware de Mexico. BWMX is a direct sales company in Mexico (homewares, cosmetics) trading at 6x ’25 earnings and ~5x 2026 earnings.

After a long period of digestion, Betterware is back to growing its salesforce, which is likely to result in a re-rating. At 8-10x earnings, the stock could trade at $20-$25 vs ~$13 today. If no re-rating, you can still get paid through a mid-to-high-teens return through dividends (~10%) and debt paydown.

I am sharing my full write-up (no paywall) below.
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Yellowbrick Investing
$BWMX

One of the cheapest stocks I own is $BWMX -- Betterware de Mexico. BWMX is a direct sales company in Mexico (homewares, cosmetics) trading at 6x ’25 earnings and ~5x 2026 earnings.

After a long period of digestion, Betterware is back to growing its salesforce, which is likely to result in a re-rating. At 8-10x earnings, the stock could trade at $20-$25 vs ~$13 today. If no re-rating, you can still get paid through a mid-to-high-teens return through dividends (~10%) and debt paydown.

I am sharing my full write-up (no paywall) below. - Clark Square Capital
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Yellowbrick Investing
$RXO short

$RXO short thesis in 2-minutes. https://t.co/YIXsKtns3u - Keith Dalrymple
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Capital Employed
4 more Q3 fund letters just added. Including @alluvialcapital @lukewinchester9 and many more --->

https://t.co/wUDSfhTdYl https://t.co/be20InF58S
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Hidden Value Gems
Looks like the last bulls on $EVO are capitulating 🤔

Results are horrible for sure, but at least expectations and sentiment are now more than realistic.
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Capital Employed
Our regular quarterly post... 👇

What stock are you most bullish on sub $2 million?

(Please do re-tweet this so we can get as many ideas as possible. Thanks 🙏).
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Yellowbrick Investing
$1970.HK

$IMAX $1970hk Logic quickly being validated. This is an incredible business worth paying up for as it captures a wildly disproportionate share of value in the industry:
- 50% EBITDA margin, >20% profit margin;
- IMAX box office +29% domestically and 50% globally notwithstanding overall box office declining 11% YoY (>5% share domestically)
- Given the above demand, no surprise systems installs are booming - exhibitors and studios both need IMAX to draw crowds (hence the huge royalty IMAX can extract on both ends). Loads of white space still: - Dylan Marrello
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Investing visuals
From their peak:
• $CRWV is down -33%
• $NBIS is down -27%
• $IREN is down -25%

Year-to-date:
• $CRWV is up +203%
• $NBIS is up +223%
• $IREN is up +395%

Zoom out, pullbacks are healthy. https://t.co/6p2tm2PoSN
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Yellowbrick Investing
Quantum closes red today
- yay
- nay
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