On the heels of our NFL theme yesterday, we are featuring a stock this morning that will likely resonate with many readers.
I am sure that fans all across the country were drinking beer and having a great time while watching the full slate of games, yesterday. Unfortunately, some of these fans have a serious problem with alcoholism and addiction to harmful substances.
The good news is that we are once again featuring a company that has designed what may be the holy grail of alcohol treatment. The Company’s program is so popular that it has already seen a 300% increase in enrollees in the past year, with even higher growth figures in the offing, as more clinics open around the country.
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The alcohol and substance addiction treatment market is huge, with $23 billion spent annually. According to the Centers for Disease Control and Prevention, 38 million Americans are considered heavy drinkers, consuming more than three drinks per day. The impact of this disease on our economy is staggering. The CDC estimates that alcoholism costs the U.S. economy $220 billion each year.
BioCorRx may have developed the holy grail of alcohol treatment, known as the Start Fresh Program, which is used by clinics across the country. The program combines an outpatient procedure with one-on-one life coaching specifically tailored for the treatment of alcoholism and other substance abuse addictions. As the number of success stories grows, BioCorRx’s Start Fresh Program could become the go-to addiction treatment program of choice.
The Company’s business model should result in major operating profits beginning next year as meaningful market penetration occurs. Revenue is generated via program sales on a per-patient basis and BICX benefits from clinics’ advertising and marketing campaigns.
Our current projections call for $2.6M in revenue this year, jumping to $10.5M in 2015 and $22.8M in 2016. Net profit should be recorded in 1H15, with EPS of $0.02 for the year. We note that these projections assume limited market penetration of just 30 clinics in the next 2 ½ years; the greater the penetration the greater the profits, and thus the valuation.
In our view, the BICX model is compelling given the top-line growth opportunities and its high operating margins. Our 12-month price target of $0.40 is based upon a conservative P/E multiple of 20x the expected $0.02 in EPS for 2015, although we note that this figure could be shattered if the growth in treated patients exceeds our forecast. Even at $0.40, the stock could be considered inexpensive, as the price/sales multiple would hover around 1.4x. Plus, given the BioCorRx model, operating and net margins of 30+%, the shares could ultimately be afforded a premium valuation. We rate these shares Speculative Buy.
Recent Trading History For BICX
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Senior Analyst: Robert Goldman
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.
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