{"id":37942,"date":"2023-07-19T22:27:02","date_gmt":"2023-07-20T02:27:02","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/artivion-stock-on-x-sales-double-5-year-average-far-more-constructive-view\/"},"modified":"2023-07-19T22:27:04","modified_gmt":"2023-07-20T02:27:04","slug":"artivion-stock-on-x-sales-double-5-year-average-far-more-constructive-view","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=37942","title":{"rendered":"Artivion Stock: On-X Sales Double 5-Year Average, Far More Constructive View"},"content":{"rendered":"
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Investment Briefing<\/h2>\n

In the time since my April publication, the tides of change have arrived at the shores of Artivion, Inc.’s (NYSE:AORT<\/span>) feet. Rewind back to midway through FY’22, there was sheer panic from investors after the company announced its PROACT mitral clinical trial had failed. Investors dumped the stock and rode it from ~$22.50 down to $9.60 in just 3 weeks of trade.<\/span><\/p>\n

I’m the first to admit my hopes for AORT’s equity performance\u2014not the company’s performance\u2014were dashed at the time as well [I’d gone from a strong buy in May FY’21 to rating it hold by Q3 FY’22]. However, slowly but surely, the company has demonstrated its capacity to overcome the market’s short-term machinations.<\/p>\n

AORT’s growth equation is fairly simple calculus. It is a function of 1) sales [inc. ancillary sales] of existing product lines, 2) obtaining new product approvals, and 3) adding reps to move product and get revenues through the door. With that in mind, I am turning far more constructive on the company moving forward, and I’ll run through my investment reasoning why in this report. Net-net, I have turned far more constructive on AORT, and am opening a position, eyeing $24 as the price target, 50% on the market price as I write.<\/span><\/p>\n

Figure 1. AORT price recovery following FY’22 selloff instigated by PROACT failure<\/p>\n

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Data: Updata<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Risks to investment thesis<\/h4>\n

Investors must understand the following risks that could nullify the investment thesis:<\/p>\n

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  1. We saw the sensitivity of the market to AORT’s trial updates last year. Any additional trial failures could result in a wide selloff.<\/li>\n
  2. I have made first commitments to AORT since 2021, and a pullback of 12.5% in the stock price from my initial entry price would see me exit the stock (my stops are placed at this mark). If AORT were to rally further, a 12.5% pullback from the average range within the rally would see me stopped out. Why the rigid numbers on exiting the position? I am in the business of compounding, and, ultimately, protecting capital. The mathematics of investment losses vs. gains are asymmetrical, and rely too much on rapid recovery once there’s a downside move. I can always buy it back on a reversal if it were to collapse.<\/li>\n
  3. There are obvious macro-level risks to consider. You’d be wise to consider the ongoing effects of the current rates cycle, inflation numbers, and the macro-level data that comes out each month that could impact equity markets.<\/li>\n
  4. Various countries are experiencing strikes by healthcare\/medical workers, which could slow the process of patient turnover for AORT, thereby crimping sales.<\/li>\n<\/ol>\n

    These should be recognized in full before proceeding, as mentioned.<\/p>\n

    Critical facts underpinning revised thesis<\/h2>\n

    Based on events that occurred since the last publication, multiple talking points for discussion. In my opinion, based on thoughtful analysis of the investment facts, AORT’s recent progress has paved the way for a clearly defined growth trajectory. Still\u2014 some issues must be addressed first.<\/p>\n

    1. Addressing the elephant in the room: PROACT Mitral<\/h3>\n

    It’s no secret that investors were rattled by the outcome of the PROACT trial. As a reminder, AORT begun the drug trial >10 years ago, and it missed the primary endpoint of stopping bleeding in thromboembolic events. AORT is still pushing for approval though. As I discussed in the last analysis: “…potential approval in H2 could be a meaningful tailwind to attract investment”.<\/em><\/p>\n

    And after extensively reviewing the critical facts to the debate, I would note the additional points:<\/p>\n