Daniel Prather of Brasada Capital Management presented his investment thesis on Azenta (US: AZTA) at Wide-Moat Investing Summit 2022.

Thesis summary:

Azenta provides biological sample storage/management solutions and genomics services to biopharma firms as well as large clinic systems and academic researchers. It is the former life sciences division of Brooks Automation. Management sold the semiconductor business in late 2021 for ~$3 billion, netting ~$2.6 billion after tax to devote all efforts to the life sciences division.

Increasing use of biological samples for research and treatment utilizing new modalities requires large-scale cold storage. A shift is underway from manual in-house storage to outsourced automated storage, where Azenta has a competitive advantage. Samples are key to developing leading-edge therapies.

The biopharma industry is increasingly outsourcing research functions. Cost pressures are driving firms to offload processes not core to scientific focus, creating a growing service industry.

Azenta, with sample storage and genomic services combined, creates a unique services platform unlike any in the industry. The sample storage business is very sticky, while add-on services feature option-like value creation. The management team has a ten-year history of value creation in life sciences equating to an annualized IRR of ~17%.

Azenta is a great business, with stellar management and a highly defensible market position, storing biopharma’s most valuable assets for future research/treatment developments, biological samples.

Daniel sees ~130% upside as the company puts its $2.5 billion in cash to work.

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About the instructor:

Daniel Prather is a senior analyst at Brasada Capital Management. Prior to joining Brasada, he was an M&A and Strategy Associate at Ensco Plc, an offshore drilling company, responsible for the valuation and execution support of ~$10 billion in M&A transactions (Atwood Oceanics, Rowan Companies). Before joining Ensco, Daniel was an equity research analyst with KLR Group in Houston covering the E&P sector of the energy industry.

Daniel’s proven track record of generating compelling risk-adjusted returns has led to recognition in various publications and associations including an award as a Finalist for the Sohn Conference’s Idea Contest in ’21.

Daniel earned a Bachelor of Science in Aerospace Engineering from The University of Kansas and a Masters of Science in Finance from Washington University in St. Louis. Daniel is also a CFA charter holder and an Eagle Scout.

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