We came across a bullish thesis on Rapid Micro Biosystems, Inc. (RPID) on Twitter by Borlaug. In this article, we will summarize the bulls’ thesis on RPID. Rapid Micro Biosystems, Inc. (RPID)’s share was trading at $2.55 as of April 3rd.
A microbiologist observing a petri dish of bacteria under a microscope.
Rapid Micro Biosystems (RPID) is a micro-cap company revolutionizing microbial quality control for biologics, vaccines, cell and gene therapies, and sterile injectable manufacturing through automation. Its core product replaces manual testing with a fully automated system, operating in a greenfield market with no direct competitors. The business model follows a razor-and-blade structure, with equipment sales driving high-margin consumables, which are projected to make up 70–80% of revenue over time. In 2024, recurring revenue stands at 55%, and gross margins have recently turned positive, reflecting improved product mix and operational efficiency. The company’s long-term financial algorithm targets 25–30% peak operating margins and high single- to low double-digit annual growth, supported by gross margins of 60–65%.
Recent results signal a strong inflection point. Fourth-quarter revenue exceeded consensus by over 5%, driven by strength in both recurring and non-recurring sales, with recurring pull-through accelerating by 22% quarter-over-quarter. This translated into gross profit that was 32% above expectations, thanks to better-than-modeled gross margins. However, consensus for 2025 still assumes a growth deceleration and unreasonably low margins, despite clear signs of operating leverage, rising average selling prices, and increasing system utilization. New product launches and consistent equipment growth further support momentum heading into 2025.
Strategically, RPID has secured partnerships with industry giants Samsung Biologics and Lonza, validating its technology and unlocking multi-year demand potential even without adding new customers. These partnerships are especially notable given RPID’s small size and cash constraints, underscoring the strength of its value proposition. Insiders, including the CEO, CFO, and board members, purchased shares in the second half of last year, adding confidence in the turnaround. With a compelling setup, improving fundamentals, and significant upside potential, RPID is emerging as a deeply undervalued player in the life sciences tools space with a highly differentiated product and growing commercial traction.
Rapid Micro Biosystems, Inc. (RPID) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held RPID at the end of the fourth quarter which was 3 in the previous quarter. While we acknowledge the risk and potential of RPID as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RPID but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.