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Shares of Moderna (MRNA) exploded in 2020, going from $20 a share to nearly $500 in April of 2021. All thanks to its work on developing a Covid vaccine. 

And while Covid seems to be under control these days. There is a new scare hitting the scene is the infectious disease known as monkeypox. Which closely resembles smallpox. 

It still might be too early to tell how severe the spread will be. But the Biden team recently announced that it would need nearly $7 billion for monkeypox response.

And just like Moderna saw its shares rise during the pandemic, we believe a new class of stocks will rise due to monkeypox. One of those names has been Siga Technologies (SIGA). 

When outbreak headlines first hit, shares of SIGA skyrocketed as did interest. To give you an idea, prior to July, SIGA rarely saw more than a half dozen searches each month by financial pros or retail investors.

In the last month, the stock garnered 1,646 pageviews!

So is it too late to jump into this biotech play?

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Siga Technologies Business

Siga Technologies Business (SIGA) is a commercial-stage pharmaceutical company that provides treatment solutions against chemical, biological, radiological, and nuclear (CBRN) threats and infectious diseases. 

SIGA developed Oral TPOXX, the first drug approved by the U.S. Food and Drug Administration (FDA), specifically for treating smallpox disease in adults and pediatric patients weighing at least 13 kg. 

The European Medicine Agency (EMA) approved oral TPOXX for treating smallpox, monkeypox, cowpox, and vaccinia complications following vaccination against smallpox. 

SIGA received government funding for over a decade and is considered a leader in health security. 

In May, the company announced the U.S. Department of Defense awarded it a contract for the procurement of up to approximately $7.5 million of Oral TPOXX. 

And in July, it said it was receiving approximately $28 million of international procurement orders for Oral TPOXX. 

During Q1 2022, SIGA announced its first sale of the intravenous (IV) formulation of TPOXX to the U.S. Government. 

In return, the firm saw its revenues double in Q1 2022 compared to Q1 2021. 

Financials 

As more cases of monkeypox emerge, SIGA will likely see a revenue boost. Furthermore, monkeypox has put the spotlight on health security. 

The firm has seen a revenue boost over the last three years, from $26.7 million in 2019 to $139 million (TTM). However, it still has a way to catch up with its 2018 revenue numbers of $477 million. 

On the bright side, SIGA is not one of those debt-ridden biotech companies hanging on by a shoestring. 

In fact, it’s a profitable company despite languishing below $10 per share for years.

The firm has a profit margin of 50% and an operating margin of 64.3%. Furthermore, SIGA’s return on assets is 34.66%, and its return on equity is a sizzling 48.14%. 

SIGA has a clean balance sheet. The firm has total debt of $2.48 million, and $153.2 million in cash, with a market cap of $1.14 billion. The firm has a current ratio of 24.4x, which means it has ample liquidity to handle its short-term liabilities. 

Investors always like to see businesses that are cash-flow positive, and that’s exactly what SIGA is. 

Valuation

At a P/E ratio of 16.8x, SIGA is relatively cheap compared to the sector median of 28.38x. Furthermore, its EPS Q/Q has improved by 53.3%

Plus, the company generates nice cash flow, giving it a 15.56x price to cash flow ratio, roughly 20% cheaper than the average.

However, its price-to-sales ratio of 9.09x is nearly twice the industry average.

Growth

SIGA has experienced a modest revenue growth (YoY) of 9.63%. However, that figure is expected to jump when the company reports its next quarterly earnings. Thanks to all the cases of monkeypox popping across the globe. 

Its enterprise went from $415.1 million on 3/31/22 to $727.6 million. Furthermore, quarterly revenue growth (YoY) stands at 118.9%

Profitability

If there is one place where SIGA shines the brightest is its profitability. The firm operates at a gross margin of 76.3%, an EBIT margin of 64.3%, EBITDA margin of 64.4%, and net income margin of 50.1%

Our Opinion 8/10

We believe the recent pandemic, and now monkeypox, have raised considerable awareness of the health security sector. 

SIGA experienced an incredible surge in its stock price, gaining more than 146% ytd.

And while we don’t like chasing stocks at their highs. This stock does have the feel of Moderna 2.0. Its monkeypox vaccine is approved in Europe and Canada. And approved in the United States for smallpox. 

We believe this company’s stock will continue to surge and like it on any dips. And think it will outperform the overall market for the next 12-24 months.