A bullish case for Bio-Techne Corporation ($TECH)

Investment idea by DTI

Exchange: NASDAQ
Sector: Healthcare

Industry: Biotech

Entry strategy

Price: market price
Stop-loss: $139
Take profit: $220
Investment horizon: 5–6 months

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Company info

Bio-Techne Corporation is a leading developer and manufacturer of proteins and biotechnological tools. $TECH's portfolio includes over 500 thousand products under 11 brands. The company employs 1650 workers.

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Investment rationale

On December 22nd, 2017 Donald Trump signed the tax reform that made repatriation of funds from abroad easier. Consequently, biotech giants moved their cashpiles back into the US. The list includes Amgen ($36 billion worth of overseas funds), Gilead Sciences ($20 billion), Pfizer ($22 billion), and Merck ($22 billion).

The money is usually used to finance buybacks of shares and dividends. However, these companies have reached the limits of their organic growth, and the only way left for them to grow is to buy other companies in the new markets. Potential targets for acquisition are mostly companies below $10 billion in market cap and an FDA-approved or final-stage portfolio of products.

Among possible candidates, we selected Bio-Techne. $TECH is showing growth from both fundamental and technical points of view, while having a wide range of products (more than 500 thousand), either in development or already approved for sales in the US.

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Technical analysis

Pic. 1. Investment strategy for Bio-Techne Corporation ($TECH). Source — TradingView.

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Financial performance and growth

The company has showed a stable profit and revenue growth in the fourth quarter of 2017: net profit grew sixfold year-on-year, while sales grew by 12.8%.

Table 1. Bio-Techne quarterly performance. Source — MarketWatch.
Table 2. Bio-Techne yearly performance. Source — MarketWatch.

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Other investment opportunities

The rationale behind investing in Bio-Techne Corporation can also be applied to its peers, some of which are listed below:

Table 3. List of biotech companies with key fundamentals. Source — MarketWatch.