PAX Global May Be Pounded Down Into Bargain Territory

When last I wrote about PAX Global (OTCPK:PXGYF) ((0327.HK)), the latest story was the company's now-former CFO throwing a temper tantrum at a sell-side analyst (Timothy Lam) who had the temerity to be negative on the stock. By the way, not only did that tirade cost the CFO his job, that bearish analyst was right - the stock has fallen more than 40% since then, and a lot of what the analyst pointed out as bearish concerns (a weakening position in China, inflated expectations for developed market adoption, weak service offerings) have become significant issues.

I do have some real concerns about PAX's position in its home market, as well as its ability to penetrate developed markets like the U.S., but I also see solid execution in markets like Brazil as a sign that PAX isn't beyond redemption. I have slashed back my expectations to single-digit revenue and FCF growth, but even those lower projections support a fair value almost 60% higher than today's price. Although this is a very high-risk name, I'm starting to wonder whether these shares have beaten down to a point where they offer a good return on the risk.

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PAX Global May Be Pounded Down Into Bargain Territory