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Can the Medical Developments share price double again in 2020?

Nikhil Gangaram
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The Medical Developments International Ltd (ASX: MVP) share price has started 2020 on the right foot, up more than 5% at the time of writing and trading at all-time highs. The company’s share price outperformed in 2019, finishing the year 110% higher.

So, can the Medical Developments share price double again in 2020?

What does Medical Developments do?

MVP is an Australian company that specialises in providing emergency pain relief and respiratory products. The company’s emergency medical solutions are used in emergency departments of Australian hospitals, the Australian Ambulance Service, the Australian Defence Force and various other medical settings.     

MVP’s flagship product Penthrox is a fast-acting, non-opioid analgesic used for patients with trauma or for surgical procedures. The product has been used in Australia for more than 40 years, with more than 7 million units sold. Penthrox is also approved for sales in 40 other countries, including Europe, the UK and is pending FDA approval in the lucrative US market.  

How did Medical Developments perform in 2019?

MVP saw gross revenue soar 19.3% to $21.38 million when the company reported earnings for FY19. Other highlights from the company’s full-year earnings included a 327% increase in net profit after tax of $1.04 million and EPS growth of 293% to 1.61 cents per share. MVP also declared a fully franked final dividend of 2 cents per share, taking total dividends per share for FY19 to 4 cents per share.

MVP reported sales for its Penthrox product grew by 47% for FY19, with Australian demand increasing by 32% and a 68% increase in UK sales. The company also provided an update on potential approval of Penthrox by the US Food and Drug Administration (FDA), which is estimated to occur in 2023 pending further trials. MVP’s respiratory products also performed well, with sales for respiratory devices increasing 62% in the US market and 111% in the Asian market for FY19.

Should you buy?

The outlook for MVP continues to be positive, with the company experiencing growth across all its segments. The company’s global expansion of Penthrox continues, with a full rollout in 14 EU countries expected by FY20. FDA approval for the lucrative US market is still a while away, but MVP expects that if all phase trials are successful it could be granted by 2023. In addition, the company’s respiratory devices continue to experience strong growth in Australia.

MVP continues to develop and progress its manufacturing technology with the CSIRO and has a pipeline of innovative products that are pending patent registration. The company has also repaid its debt and has a strong cash position, which will allow MVP to continue paying a dividend in the short-term.

In my opinion, companies that are in the process of gaining FDA approval can be hit and miss given the arduous trial process. However, MVP has additional growth areas and is also in the process of receiving approval in China. In addition, given the opioid epidemic in the US, the FDA may look to fast-track approval of non-opioid analgesics like Penthrox, pending trial results.

MVP is definitely a company to watch in 2020 and I think it would be prudent to keep this company on a watchlist before making an investment decision.

The post Can the Medical Developments share price double again in 2020? appeared first on Motley Fool Australia.

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Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Medical Developments International Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020