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Yahoo
6 days ago
- Business
- Yahoo
Arvinas, Inc. (ARVN): A Bull Case Theory
This stock is one of several featured in our latest research. For more small-cap opportunities with asymmetric return potential, read our free article: 10 Promising SmallCap Stocks Under $1 Billion Market Cap. We came across a bullish thesis on Arvinas, Inc. on by Ray Palmer. In this article, we will summarize the bulls' thesis on ARVN. Arvinas, Inc.'s share was trading at $7.59 as of July 16th. Photo by Myriam Zilles on Unsplash Arvinas (ARVN) presents a compelling deep value investment, trading at $6.50 despite holding $954M in cash ($13/share), significantly exceeding its market cap. Beyond cash, Arvinas owns a Novartis-partnered asset that brought in $150M upfront, with a risk-adjusted NPV estimated at $300M ($4/share). Its breast cancer drug, vepdegestrant (vepdeg), though no longer a blockbuster candidate, retains meaningful value as a second-line treatment for mutant patients—a smaller but high-value market. The company estimates a sum-of-the-parts valuation north of $20/share, though corporate overhead currently drags on that value. The opportunity exists due to a combination of investor disillusionment and strategic missteps. Vepdeg's Phase 3 data, announced in March, showed no efficacy in wild-type patients, capping its commercial scope. Pfizer, Arvinas's partner, subsequently cancelled combo trials, but notably retained involvement through a Phase 1 combo study it fully funds and prominently featured vepdeg in its ASCO plans—suggesting continued interest. A near-term catalyst is ASCO's full data reveal, where Arvinas has teased best-in-class potential in mutant breast cancer. A second catalyst could be Pfizer assuming full commercialization duties under existing partnership terms, avoiding Arvinas's inefficient standalone approach. If Pfizer declines, selling the asset becomes the most viable path. Activism remains a third catalyst. Insider ownership is minimal, executive compensation is excessive, and the cost structure hasn't adapted to the company's diminished scope. An activist could drive governance reforms, prevent value-destructive commercialization attempts, and push for a return of excess cash to shareholders. With a large margin of safety and multiple catalysts, Arvinas offers an attractive asymmetric risk/reward setup. Previously we covered a on Relay Therapeutics, Inc. by Steve Wagner in May 2025, which highlighted the company's strategic pivot to focus solely on RLY-2608, supported by deep cost cuts and a strong cash runway through 2029. The company's stock price has appreciated approximately by 15% since our coverage. This is because early clinical data validated RLY-2608's potential. The thesis still stands as the lead program advances into pivotal trials. Ray Palmer shares a similar view on the breast cancer space but emphasizes Arvinas's undervaluation, cash-rich balance sheet, and activist-driven upside. Arvinas, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held ARVN at the end of the first quarter which was 32 in the previous quarter. While we acknowledge the potential of ARVN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None.
Yahoo
6 days ago
- Business
- Yahoo
Cytek Biosciences, Inc. (CTKB): A Bull Case Theory
This stock is one of several featured in our latest research. For more small-cap opportunities with asymmetric return potential, read our free article: 10 Promising SmallCap Stocks Under $1 Billion Market Cap. We came across a bullish thesis on Cytek Biosciences, Inc. on by diamond123. In this article, we will summarize the bulls' thesis on CTKB. Cytek Biosciences, Inc.'s share was trading at $3.2400 as of July 16th. View of a biopharmaceutical processing laboratory, showcasing the advanced technology used to create treatment solutions. Cytek Biosciences (CTKB) presents a uniquely attractive setup, combining leading-edge technology in flow cytometry with strong financials, meaningful downside protection, and misunderstood market pessimism. The company's flagship Full Spectrum Profiling (FSP) platform, launched with the Aurora in 2017, has enabled labs to significantly expand marker analysis per sample at lower cost, smaller footprint, and better usability versus legacy systems. Its patented laser system and unmixing software underpin a suite of differentiated products, including the Aurora CS and upcoming launches in clinical-use and integrated imaging models, both expanding the total addressable market. Despite cyclically weak medical research funding, Cytek remains EBITDA-profitable, generates positive free cash flow, and benefits from a growing recurring revenue stream—now 30% of sales—from reagents, software, and services. Gross margins remain high (~58%), supported by proprietary manufacturing. Importantly, Cytek trades at an implied enterprise value under $50 million, with $265 million in net cash and ~$0.37/share in working capital, suggesting investors are paying a fraction of revenue for a profitable, IP-rich business. The company is repurchasing stock, and management—who owns over 10%—has signaled disciplined capital allocation, including M&A. While competition from incumbents like BD and Sony remains, Cytek continues to take share due to usability and pricing. End-user feedback confirms high satisfaction, and broader adoption appears to be underway. Catalysts include improving industry sentiment, expansion of recurring revenue, product launches, and potential buybacks or acquisitions. With its rare blend of strong fundamentals, dominant IP, and strategic optionality, Cytek is well-positioned for multiple reratings as sentiment rebounds, with limited downside at current valuation. Previously, we covered a on Rapid Micro Biosystems, Inc. (RPID) by Borlaug in April 2025, which highlighted the company's automation-led disruption in microbial quality control, its razor-and-blade model, and validation through key partnerships. The company's stock price has appreciated by approximately 28.62% since our coverage. This is because recurring revenues and margins improved sharply. Diamond123 shares a similar view on Cytek Biosciences (CTKB) but emphasizes its leadership in flow cytometry and balance sheet strength. Cytek Biosciences, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held CTKB at the end of the first quarter which was 19 in the previous quarter. While we acknowledge the potential of CTKB as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
Exagen Inc. (XGN): A Bull Case Theory
This stock is one of several featured in our latest research. For more small-cap opportunities with asymmetric return potential, read our free article: 10 Promising SmallCap Stocks Under $1 Billion Market Cap. We came across a bullish thesis on Exagen Inc. on by inflection99. In this article, we will summarize the bulls' thesis on XGN. Exagen Inc.'s share was trading at $7.00 as of July 16th. A doctor reading the results of a Phase 2 clinical trial of treatments for cancer, infectious diseases and autoimmune and inflammatory diseases. Exagen (XGN) is a molecular diagnostics company specializing in autoimmune diseases like lupus and rheumatoid arthritis, primarily serving rheumatologists with its proprietary AVISE® test suite. Its flagship product, AVISE CTD, offers superior diagnostic capabilities versus the standard of care, combining multiple tests with enhanced sensitivity and specificity, reducing diagnosis time, hospitalizations, and repeat testing. The autoimmune diagnostics market is large, underserved, and economically attractive to all stakeholders—patients, providers, and payers—due to better outcomes, cost savings, and improved practice efficiency. This favorable market backdrop is amplified by the emergence of novel lupus therapies, increasing pharma's incentive to partner with diagnostics players like Exagen. The company holds key advantages through its proprietary biomarkers, unique reimbursement code, and growing coverage with Medicare and commercial payers. Recent innovations, such as new T-cell markers and early kidney disease detection, support pricing power, gross margin expansion, and potential biopharma revenue. Led by CEO John Aballi—who previously executed a similar playbook at Decipher before selling to Veracyte—Exagen has transformed from a cash-burning operation to near breakeven, with revenue acceleration, ASP tailwinds, and profitability expected by Q4 2025. Strategic interest is also plausible; Labcorp recently highlighted autoimmune disease as a priority area, positioning Exagen as a potential acquisition target. With minimal sell-side coverage, recent capital raises, and multiple upcoming catalysts—including improved reimbursement, guideline inclusion, and biopharma partnerships—Exagen is poised for a re-rating. Applying a conservative 4.5x 2026E revenue multiple implies 2.5–3x upside from current levels, while downside appears limited given the business's turnaround, strategic value, and current low-end peer valuation. Previously, we covered a bullish thesis on Oscar Health, Inc. (OSCR) by Oguz Erkan in May 2025, which highlighted the company's tech-driven platform, margin improvement, and expansion opportunity in ACA markets. The company's stock price has appreciated by approximately 21.62% since our coverage. This is because the thesis played out. Inflection99 shares a similar view on Exagen but emphasizes its autoimmune diagnostics advantage. Exagen Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held XGN at the end of the first quarter which was 7 in the previous quarter. While we acknowledge the potential of XGN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
14-07-2025
- Automotive
- Yahoo
O'Reilly Automotive, Inc. (ORLY): A Bear Case Theory
We came across a bearish thesis on O'Reilly Automotive, Inc. on by moneytr33. In this article, we will summarize the bears' thesis on ORLY. O'Reilly Automotive, Inc.'s share was trading at $90.13 as of June 30th. ORLY's trailing and forward P/E were 33.13 and 30.67 respectively according to Yahoo Finance. O'Reilly Automotive (ORLY), widely regarded as a best-in-class auto parts retailer, is facing a compelling short case despite its operational excellence. The company boasts industry-leading same-store sales growth, unit expansion, and return metrics, but its current valuation—trading at 31x forward earnings—is at an all-time high and appears disconnected from its underlying fundamentals. At this elevated multiple, ORLY offers a forward return of only 8–9%, driven by mid-single-digit revenue growth and a 3% free cash flow yield. Operational pressures are mounting as gross margins face headwinds and SG&A costs rise, leading to a decline in operating margins. Furthermore, share buybacks, once a key EPS lever, have become uneconomic given ORLY's earnings yield is now below its cost of debt, eroding prior financial engineering advantages. The pro segment, though sticky and lower-margin, is maturing, and growth has decelerated. Meanwhile, competitive threats are rising—from Walmart's expanding auto parts push to a rejuvenated Advance Auto Parts reducing market share giveaways. Structural risks such as fewer parts in EVs and a future shift toward autonomous vehicles could dampen long-term sentiment. Historically, valuation air pockets—as seen in 2017—have led to multiple compression, especially as cyclical tailwinds like post-COVID car demand normalize. Today's 31x forward P/E, 1.5x the S&P's multiple versus a historical average of 1.14x, could revert to or fall below market multiples, implying over 30% downside. Though ORLY is not expected to implode fundamentally, it now resembles a richly priced, maturing business in an increasingly competitive and uncertain landscape—making it an attractive relative short. Previously we covered a bullish thesis on AutoZone, Inc. by The Compounding Tortoise in June 2025, which highlighted its attractive valuation, strong same-store sales rebound, and long-term growth from new mega hubs. The company's stock price has appreciated approximately by 1.4% since our coverage. This is because the thesis played out modestly. moneytr33 shares a contrarian view on peer O'Reilly Automotive emphasizing its stretched valuation and margin pressures. ORLY isn't on our list of the 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of ORLY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Sign in to access your portfolio
