Bioshares Rates Stocks
For the purpose of valuation, Bioshares divides biotech stocks into
two categories. The first group are stocks with existing positive
cash flows or close to producing positive cash flows. The second
group are stocks without near term positive cash flows, history
of losses, or at early stages of commercialisation. In this second
group, which are essentially speculative propositions, Bioshares
grades them according to relative risk within that group, to better
reflect the very large spread of risk within those stocks.
Stocks with existing positive cash flows or close to producing
positive cash flows.
Buy CMP is 20% < Fair Value
Accumulate CMP is 10% < Fair Value
Hold Value = CMP
Lighten CMP is 10% > Fair Value
Sell CMP is 20% > Fair Value
(CMP–Current Market Price)
Stocks without near term positive cash flows, history of losses,
or at early stages commercialisation.
Speculative Buy – Class A
These stocks will have more than one technology, product or investment
in development, with perhaps those same technologies offering
multiple opportunities. These features, coupled to the presence
of alliances, partnerships and scientific advisory boards, indicate
the stock is relative less risky than other biotech stocks.
Speculative Buy – Class B
These stocks may have more than one product or opportunity, and
may even be close to market. However, they are likely to be lacking
in several key areas. For example, their cash position is weak,
or management or board may need strengthening.
Speculative Buy – Class C
These stocks generally have one product in development and lack
many external validation features.
Speculative Hold – Class A or
B or C