20-Oct-2022: CCZ Equities: Cogstate: Backlog builds for Alzheimer's trials, but revenue delayed

This was one of three free broker reports sent out by the ASX today (Friday 21st October 2022). The other two were a Wilsons' report on EQT Holdings (EQT) and a report from Ord Minnett on AIC Mines (A1M).

All three reports are described by the ASX as "Updates".

CCZ's investment thesis (from the top of page 3 of their update) for Cogstate is:

"A 20-year success story now poised for its next phase of growth with strong industry tailwinds. Recent transactions (WCG Clinical) have valued a clinical trials business on 29x EV/EBIT, based on which CGS's Clinical Trials segment alone is worth $1.84 per share. CGS is a fully funded, global health-tech at a steep discount, with significant growth optionality in its healthcare segment."

However, on page 1, they say:

"Investment thesis unchanged: Alzheimer's remains a long-standing disease with a growing number of patients, and until now has lacked any effective treatment. With the promising progress to date, it is hard to imagine investment in the sector slowing down anytime soon. Our DCF model suggests a valuation of $385.4m or $2.22 per share."

CGS closed today at $1.87, which was up +3c (or +1.63%) from yesterday's $1.84 close.

Disclosure: I have held CGS shares in prior years, but do not hold any currently.