5 Undervalued Stocks Hedge Funds Are Talking About

You can find the first part of this article here: 10 Undervalued Stocks Hedge Funds Are Talking About. Here are the top 5 stocks:

5. Inotiv Inc. (NOTV)

Summers Value Partners, in its Q4 2021 investor letter, mentioned Inotiv, Inc. (NASDAQ: NOTV) and discussed its stance on the firm. Inotiv, Inc. is a West Lafayette, Indiana-based biopharmaceutical analytical, reproductive toxicology, medical device testing provider with an $831.6 billion market capitalization. NOTV delivered a -22.34% return since the beginning of the year, while its 12-month returns are up by 162.83%. The stock closed at $32.67 per share on February 3, 2022.

Here is what Summers Value Partners has to say about Inotiv, Inc. in its Q4 2021 investor letter:

“Inotiv is a contract research organization (CRO) providing pre-clinical research services to the pharmaceutical and biotechnology industries. We have written in the past about the turnaround happening at Inotiv spearheaded by CEO Bob Leasure who was hired in 2017. The company made a series of acquisitions in 2021 including Envigo, a purveyor of research models. We believe that Envigo has underappreciated pricing power across its business. The supply chain has been disrupted by COVID-19 at a time when demand for certain research models is high. In aggregate, we expect Inotiv to exceed the current consensus sales estimate in 2022 by $100 million or roughly 20%. We are modeling sales in 2022 to approach $575 million with an operating profit of almost $65 million (11% margin). Inotiv’s stock has declined by over 50% since November and we believe the shares are undervalued at current levels. We expect the company to generate free cash flow per share of $1.25 in 2022 and over $2.00 in 2023. The drivers of free cash flow growth include better capacity utilization through increased scale along with the embedded pricing power in the Envigo business. Our price target of $70 remains unchanged.”

Our calculations show that Inotiv, Inc. (NASDAQ: NOTV) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. NOTV was in 14 hedge fund portfolios at the end of the third quarter of 2021, compared to 12 funds in the previous quarter. Inotiv, Inc. (NASDAQ: NOTV) delivered a -37.97% return in the past 3 months. In October 2021, we also shared another hedge fund’s views on NOTV in another article.