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Commentary

Synthetic Blood International (SYBD) is set to capitalize on strong blood substitutes market

More than 4.5 million patients need blood transfusions each year in the US and Canada. Every three seconds someone needs a blood transfusion, while on average, one out of every 7 people entering the hospital will need blood. About 37 out of every 100 Americans are eligible to donate blood – while only 3 to 4 people out of every 100 actually donate each year. These are only a few facts about blood.

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In recent years the staffing industry has emerged as a vital part of America’s corporate structure.  According to a data released from the American Staffing Association, America’s staffing companies employed an average of 2.96 million temporary and contract workers per day in 2006, an increase of 1.8% over the previous year.  Demand for professional and specialized skills will likely continue to exceed overall labor demand in most industries, from manufacturing to the service sector.  Professional and specialized staffing is a key focus of staffing agencies since this is the industry’s highest-margin and fastest-growing segment.  Axiom Management Inc. (AXMA), as a key player in the industry, provides services to clerical and technical companies, logistics providers, warehouses and light manufacturing businesses.  The Company is also a recognized authority on safety / risk management and workplace compliance with Occupational Safety and Health Administration (OSHA) requirements, a key differentiator and competitive advantage in the staffing market.

Revenues generated by the global staffing services market approached $326 billion in 2006 and are expected to exceed $390 billion by year-end 2011, with $108.2 billion from the U.S. market alone.  The staffing industry is characterized as highly fragmented, consisting of a few large players and thousands of small companies generating between $5 million to $20 million in annualized revenues. The fragmented nature of the industry creates favorable acquisition opportunities for consolidators such as Axiom.

Axiom Management (AXMA) recently signed Letters of Intent (LOI) to acquire three separate staffing companies.  The first LOI, signed in September, was to acquire a multi-location staffing company in upstate New York that generated 2006 revenues of approximately $17 million.   Axiom has followed it up by executing two additional Letters of Intent to acquire a New York based personnel consulting firm and a Florida payroll processing and human resources outsourcing agency.  Aggregately, the three acquisition targets represent a total of approximately $51 million in annualized gross revenue, with EBITDA of approximately $3.6 million.

Peter Morales, President of Axiom stated "The addition of these strategic acquisitions will enable Axiom to quickly expand its market penetration, geographic coverage and customer base, realizing significant economies of scale and capitalizing on cross-selling opportunities associated with marketing our risk management services to newly acquired customers." Mr. Morales further stated that "It is also worth noting that these acquisitions may generate approximately $51 million in future gross revenues based on current run rates."

Axiom has also identified acquisition candidates that together could add over $67.5 million to annualized revenues and $7 million to annualized EBITDA.

Beacon Equity Research Disclosure

The analysts contributing to this report do not hold any shares of Axiom Management (AXMA). Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts' personal views as to the subject securities and issuers. The analyst(s) writing this report recognize and aspire to all of the CFA Institute Guidelines for Independent Research. Beacon Equity Research (“Beacon”) certifies that no part of the analysts' compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analysts in the report. Beacon has been compensated a total of eight thousand shares of common stock directly from Pilot Financial for enrollment of AXMA in its research program. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. As such, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change.

 
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