NovaBay Pharmaceuticals, Inc. (AMEX: NBY) shares may be trading at microcap levels, but make no mistake: they have a product arsenal capable of competing with the large-caps. That presents significant revenue-generating potential for NBY and investment opportunities for those seeking valuation disconnects. In fact, Ascendiant Capital, an esteemed analyst firm, has provided a compelling case outlining why NBY stock can surge from current levels. After an in-depth analysis, analysts at Ascendiant model for NBY stock to soar by over 1566% from the current levels. (* share price of $0.72, Yahoo! Finance, 06/20/23, 3:08 PM EST)
These projections, leading to a $12 price target, are not mere conjecture. The Ascendient analyst supports the thesis by factoring in critical value drivers specific to NBY's market opportunities, including market growth prospects, segment size in monetary terms, and NovaBay's ability to effectively reach its target audience. Based on the bullish forecast, Ascendiant's research suggests that NovaBay is ticking all the right boxes.
Key Value Drivers Support Bullish Thesis
While scoring that $12 target may initially seem ambitious, it is supported by the combined value of NovaBay's diverse and still-growing product portfolio. Keep in mind that NBY targets high-demand treatment and personal care markets, with a strategic focus on key sectors such as eye care, skin care, and wound care. These markets collectively represent billions in potential revenues, and NovaBay is well-positioned to maximize that opportunity. In fact, they are already doing so through its best-in-class products, including its highly regarded Avenova-branded eye care, DERMAdoctor skin care, and PhaseOne wound care products. In addition to generating revenues, these products bring additional value by diversifying NovaBay's market presence, creating multiple income streams, and positioning the company to capture a significant share of several high-value consumer markets.
The collective strength of NBY’s parts adds to the considerable evidence suggesting that NovaBay is undervalued at its current levels. This is especially clear after accounting for the tangible steps taken by NBY to accelerate its growth, particularly its ability to penetrate a high-dollar market with its exceptional eye care products. That market is accessed through clinically proven Avenova® Antimicrobial Lid & Lash Solution, which eye-care professionals prescribe for blepharitis and dry-eye disease. Avenova's efficacy and popularity have led to a strategic partnership with Eyeganics to sell OTC Organic Tears on Avenova.com. These tears, certified as 100% organic and preservative-free by the USDA, offer a simple and refreshing solution for dry eyes.
Adding more user value, the innovative packaging technology allows for more than 250 drops per bottle, providing a cost-effective and convenient advantage over other preservative-free artificial tear products. Don't underappreciate the potential inherent to NovaBay's eye care line; it gives them a presence in the $68 billion global ophthalmic therapeutics market. And with its products offering distinct advantages over the competition, NBY is indeed positioned to capitalize on significant demand from a product that is all-natural, organic in formulation, and cost-effective.
However, remember that its eye-care products aren't the only value drivers.
NovaBay Targets Skin and Wound Care Market Opps
Beyond eye care, NovaBay has also successfully capitalized on opportunities within the skin and wound care industries. They are intent on continuing that trend, made evident after NBY announced fulfilling a substantial order for its NeutroPhase Skin and Wound Cleanser from China Pioneer Pharma Holdings, Limited, a prominent importer and marketer of branded pharmaceuticals and medical devices in China.
NovaBay's NeutroPhase stands out for its superior purity, power, and gentleness on the skin and new tissue. Unlike many competing products, including those from Johnson & Johnson (NYSE: JNJ), Bristol Myers Squibb (NYSE: BMY, and Merck (NYSE: MRK), NeutroPhase does not contain toxic chemicals, making it the preferred choice among healthcare professionals. Its efficacy in killing bacteria and eliminating biofilm, a significant obstacle in wound healing, adds to its appeal. That's not all.
In combination with NovaBay's PhaseOne wound care product, NBY now has a wound-care product arsenal that possesses substantial revenue firepower and significantly contributes to expanding its market reach and potential. Considering the global wound care market's projected worth of $30.2 billion by 2032, NovaBay is doing the right things with the right products at the right time to seize its share of revenues in this important sector. There's more to like.
DERMAdoctor® Increases the NBY Value Proposition
NovaBay successfully expanded its product offerings into the high-dollar skin care and treatment markets after launching DERMAdoctor® Comfort + Joy Psoriasis Therapeutic Moisturizing Cream. This strategic diversification should significantly enhance NovaBay's revenue streams and provide additional opportunities for accelerated market penetration in a lucrative global skincare market.
Dr. Audrey Kunin, Chief Product Officer and a board-certified dermatologist, introduced this innovative product on the QVC network to showcase its effective treatment and relief for individuals with psoriasis. The global market for psoriasis treatment is substantial, with approximately 125 million people affected worldwide, including nearly 8 million individuals in the United States alone.
Addressing the challenges faced by psoriasis patients, NovaBay's moisturizing cream is formulated with 3% Salicylic Acid and is free of steroids and fragrance, offering relief while preventing symptom recurrence. The QVC appearance represents a pivotal moment expected to lead to significant sales and recurring revenues for the company. The even better news is that those rewards could come sooner than later, with QVC having a tremendous influence on product sales. Moreover, it makes introductions at times most appropriate to target a specific demographic. In other words, a positive update from that show's performance could be in the queue.
NovaBay as a Sum-of-its-Parts Consideration
Undoubtedly, the best way to appraise NBY is by valuing the sum of its parts. Know that NBY has the right products to drive rapid growth, increasing revenues, and operational costs that are being managed lower. Moreover, NovaBay is gaining revenue-generating momentum by introducing its products to a broader audience through strategic partnerships and the effective utilization of digital marketing technologies. These initiatives are expected to drive additional accretive growth throughout the year. With a well-rounded approach to revenue generation, NovaBay presents an attractive, even compelling, investment opportunity.
Keep in mind that the analysis by Ascendiant Capital, leading to a $12 per share price target within the next 12 months, is not solely based on the company's current merits. It's rooted in NovaBay's ability and expectation to establish a significant presence in vast target markets, where capturing even a small share can translate into substantial revenues. They also note NovaBay's management team, strategic partnerships, and ambitious marketing agenda for 2023 as reasons for the optimistic forecast. While the sentiment is decidedly bullish, should NBY accelerate its trajectory as planned, revenue growth could even exceed expectations. In fact, positive developments in any of its ongoing operations could quickly result in the ascent toward, or even beyond, the 1566% increase modeled by Ascendiant.
The bottom line is simple: at current share prices, NovaBay Pharmaceuticals, Inc. presents a compelling investment opportunity based on its strategic positioning in diverse markets, exceptional product portfolio, and successful penetration of high-value consumer segments. Moreover, with a focus on eye care, skin care, and wound care, NovaBay is well-positioned and, importantly, diversified to capture market share in multiple segments that each present near and long-term revenue-generating opportunities. Investors looking to seize upon disconnects between share price and inherent potential may want to consider NovaBay at these levels.
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