Hamilton Thorne Ltd. (TSXV:HTL) shares have risen more than 12% since Capital Ideas wrote about the company 16 months ago
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(Originally published on Capital Ideas Media on January 12, 2021)
Hamilton Thorne Ltd. (TSXV:HTL) produces and sells laboratory equipment, consumables, as well as software and services to providers of Assisted Reproductive Technology (ART) – technologies and procedures used to enhance the rate of successful pregnancy.
[Editor’s Note: Hamilton Thorne shares have risen more than 12% since Capital Ideas wrote about the company 16 months ago.]
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These technologies and procedures include all interventions or processes that involve handling sperm, eggs or embryos outside the body, including in-vitro fertilization (IVF) and related procedures.
According to the European Society of Human Reproduction and Embryology (ESHRE), one in six families have fertility issues. This has created demand for about 2.4 million ART cycles performed each year, resulting in an estimated 500,000 babies being born.
It’s a market that is expected to be valued globally at $23 billion by 2022.
Echelon Capital analyst Stefan Quenneville calls Hamilton Thorne a “rare public IVF industry pure-play in a niche industry with high barriers to entry,” as he sees a number of “attractive” investment drivers for the Company.
“HTL has demonstrated a strong track record of growth with a five-year revenue CAGR [compound annual growth rate] of 32 per cent and Adjusted EBITDA of 43 per cent, driven by double-digit organic growth supplemented by an active M&A strategy,” he said.
“HTL’s historical roots were established by its leadership in laser equipment. However, in recent years, the Company has engaged in a series of M&A transactions that have propelled it to be one of the few vertically-integrated players in the industry, providing a broad portfolio of products and services that have diversified its revenue base as well meaningfully broadened its geographic footprint.”
The analyst noted that while the ongoing COVID-19 pandemic initially resulted in the temporary closure of many fertility treatment clinics (HTL stock still managed to appreciate by nearly 35% in 2020), the restrictions have now largely been lifted and he anticipates a return to growth for Hamilton Thorne in 2021.
Mr. Quenneville added that the IVF industry has a 5-10-per-cent secular growth rate and has proven recession resistant.
Going forward, the Echelon Capital analyst expects the Company to launch its line of culture media consumables in the U.S. in the coming year, a business segment with revenues that tend to be recurring in nature, which should support sustained EBITDA margin expansion.
Finally, Hamilton Thorne will likely continue its M&A strategy of acquiring complementary assets in the IVF space, which should translate into bigger-dollar sales from IVF clinics and laboratory operators.
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