I don’t write too much about biotech stocks because it requires a lot of specialized knowledge which makes it hard to gain any kind of edge. However, I became intrigued when I learned about this one due to its great chart, its strong fundamentals, and excellent business model. This company is profitable and expected to earn 45 cents per share next year. The stock is called DUSA Pharmaceuticals (DUSA).
Highly Specialized Technology
DUSA Pharmaceuticals, Inc., a dermatology company, develops and markets Levulan photodynamic therapy (PDT) and other products for common skin conditions in the United States and internationally. Its products include Levulan Kerastick 20% Topical Solution with PDT and the BLU-U brand light source for the treatment of non-hyperkeratotic actinic keratoses of the face or scalp.
The stock got a nice pop earlier this month as investors were excited about sales of its Levulan Kerastick, which makes precancerous growths sensitive to light, then exposes it to a blue light which breaks up the growths. Sales volumes rose 22% during the quarter, and recent price increases raised revenues even more. This sounds like extremely high=tech stuff, but it seems to have wonderful potential.
I like the company’s business model, which is similar to a printer/printer cartridge model. It doesn’t make much on its BLU-U device, but rather makes its money on the Kerastick sales. This can be a profitable model with higher gross margins than other models. Other industries have made big money using this type of business model.
The Chart
Technically, the stock is looking good, despite the big year-to-date gain north of 150%. Yesterday’s 5% move on big volume cleared the $6 resistance level, which took it to new highs. I think the $6 area will act as strong support now, and any pullback should be bought as long as that level holds. I think this could be a $9 stock based on 20x next year’s estimates of 45 cents per share. I love the fact that it is profitable and cash flow positive and investors have certainly started to take notice.
A Biotech Speculation For The Weekend is an article from: 
