YB new stock pitches (Mon, Mar 3)

Legend Biotech Corporation (LEGN) is developing a promising CAR-T cancer drug in partnership with Johnson & Johnson. The stock has faced pressure due to controversy surrounding its former CEO and concerns about China. Recently, market fears about a competing treatment impacting future sales have further affected the stock price. However, the company's biotech research team believes the competing drug is significantly inferior, maintaining confidence in Legend's positioning. Despite these challenges, the partnership with Johnson & Johnson provides reassurance. The company has added slightly to its position during the period of price weakness, supported by the research team's confidence in the drug's potential and the strength of the J&J partnership.

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Rapid Micro Biosystems (RPID), trading at $2.80, automates microbial quality control for biopharma manufacturing with a razor & blade model. The company previously refused a $5 bid and is positioned for 20-30% growth with 25-30% peak operating margins. RPID trades at 3.5x 2025 P/S on consensus estimates, which are likely too low. Q4 beat expectations with improving gross margins, and FY25 consensus appears conservative. New partnerships with Samsung Biologics and Lonza signal strong technology demand. The company has a 55% recurring revenue mix in 2024, expected to reach 70-80% over time. Recent insider buying and cost discipline implementation further support the investment thesis. RPID reports earnings tomorrow, with expectations of a strong guidance due to accelerating recurring revenue pull-through, potential gross margin improvements, and the likelihood of 2025 revenue significantly exceeding current consensus estimates.

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River Tech plc (RIVER:NO), an iGaming SaaS company with 99% gross margins, trades at 4x earnings and 2.5x free cash flow. The company recently extended a 3-year SaaS agreement with its sole client, Tech4s, expected to generate €32M in operating profit, surpassing River Tech's €31M market cap. In 2024, the company paid a 28% dividend yield. New Executive Chairman Richard Trinder aims to diversify revenue streams, potentially expanding into RegTech, which could lead to a significant re-rating given the higher valuations in that sector. Risks include client dependency and poor capital allocation, while catalysts involve new revenue streams and potential RegTech success. The stock's low valuation is attributed to low liquidity, with 75% of shares held by three private investment firms, and limited institutional interest due to its small market cap and listing on the Nordic Growth Exchange. Despite strong financials, the stock is down 66% from its 2021 peak, presenting an asymmetric opportunity with downside protection via established contracts and potential upside from expansion.

Read the full article here. Read time: 4 min