A Combination Vet Care and CBD Play
PetVivo Holdings (OTC - PETV - Spec Buy) is an undervalued vet care play with a sleeper CBDcomponent that could be a huge winner.
PetVivo Holdings is well-positioned to emerge as the standard of care for the treatment of osteoarthritis in dogs and horses, an unmet need representing an estimated $3.2 billion combined annual market. The platform directly improves activity and has a strong safety profile. Given its efficacy, affordability, and the emergence of new, revenue streams for veterinarians PetVivo offers a compelling, therapy. Plus, PetVivo has a deep IP portfolio. With $15M invested in R&D including $7M from NIH, PetVivo has a 17 product-deep human and pet therapy portfolio.
Separately, PetVivo has struck a license agreement for its patented muco-adhesion technology for use in the rapidly expanding CBD market. It is important to note that the PetVivo technology may significantly improve the bioavailability of CBD, a market slated to reach $20B in sales by 2024. We believe this is a huge sleeper for the Company and major success could warrant a re-valuation.
Currently, sales are forecast to enjoy huge growth. We project sales will leap from $3M in FY20 to $12M in FY21 and $20.5M in FY22. This excludes potential contribution from what could be a highly profitable license revenue stream via its CBD delivery technology arrangement with Emerald Organic Products.
Trading at a huge discount to its peers, our target price is $3.00. Our target is based upon a 5.5x sales P/S multiple, similar to its peer group, and affirmed by a Net Present Value (NPV) calculation. Thus, we rate PETV Speculative Buy.