Zacks SCR says micro-cap Pharma-Bio Serv has 150% upside

Shares of Puerto Rican consulting firm Pharma-Bio Serv have the potential to rise 150% from current levels, according to Zacks Small-Cap Research (Zacks SCR). While the company had a bumpy 2024, its management is confident negative trends will reverse in 2025.
Details
Pharma-Bio Serv helps pharmaceutical companies to comply with U.S. Food and Drug Administration regulations. Zacks SCR values the company at $1.50 per share, implying 150% upside versus the current market price. On Friday, January 31, Pharma-Bio Serv closed at $0.60 per share in the U.S. over-the-counter market.
The day before, Pharma-Bio Serv had reported its financial results for the fiscal year ended October 31. Revenue dropped approximately 44% year over year to $9.5 million, which translated into a net loss of around $800,000, versus net income of $1.3 million in fiscal 2023.
«The headline revenue and earnings releases were below expectations [for the] quarter, but management issued comments regarding future prospects that have us optimistic that the trend of decreasing revenue will soon be reversed,» Zacks SCR noted.
Last year, Pharma-Bio Serv shifted its focus to higher-value services and redirected resources toward business development, including the adoption of advanced technologies, said CEO Victor Sanchez. These measures, in his view, position the company for growth in 2025.
«Sometimes a company must take a step back in order to move forward in a meaningful way and we believe this is one of those cases,» Zacks SCR echoed Sanchez’s optimism.
For investors
Pharma-Bio Serv has reported declining revenue for four consecutive quarters. Over the last 12 months, its stock price has dropped 34%.
Despite the declining revenue and full-year net loss, the company announced a dividend of $0.075 per share for the fiscal year.
«We believe this dividend underscores our commitment to deliver value to our shareholders and our confidence in our business plan,» Sanchez said in the company’s earnings announcement.
Zacks SCR also highlights Pharma-Bio Serv’s «solid balance sheet.» Cash has declined, but that’s because the management has decided to invest approximately $6.8 million in U.S. Treasury bills. These bonds are yielding 4-5%, Zacks SCR added.
«The solid liquidity of the company means that management has the internal funds needed to make the investments that will get PBSV back on the growth trajectory investors want to see,» wrote Zacks SCR.
Zacks SCR is the only firm covering Pharma-Bio Serv, with no other ratings available.