Wednesday, September 27

Model N: Buying The Stock Pullback

Welcome to the tail end of Q3, where we take a breath ahead of the market's big sprint toward Christmas. With a quick and quiet period, until we get into earnings season in the next two weeks, it's time once again to seek out defensive long-term plays that will provide a foundation for our portfolio during the volatile growth to come. 

And that brings us to Model N ($MODN), a promising SaaS name that comes up a lot during the research we do for our Pharma strategies. 

Basically, Model N is another proof of one of our favorite philosophies here at Moby: Boring is Beautiful. 

At its core, Model N is a company that creates software tools that allow Life Sciences and High Tech companies to manage their extremely complicated revenue streams.

It's really hard to find a drier stock on this earth to write about, but understanding how Model N is poised for a breakout year will give you a lot of insight into how the pharmaceutical and biotech industry stays on top of the insane complexities of pricing their products. 

The short of it is that Model N has had a rough year, but is starting to expand their profitability despite their revenue slowing a bit. This is thanks to a shift to a new SaaS pricing model that's about to pay huge dividends for the company. Therefore we're taking advantage of this moment of weakness to grab some solid upside while this new pricing model takes hold. 

And that's it. An enterprise-focused company like Model N is designed to make its clients make more money no matter what the economic moment is. By focusing on revenue management, they become a sticky product with massive retention, especially when budgets start to tighten up.

Going forward rates are expected to be higher for longer and defensives, like this, have outperformed this month as the market fully digests this news. 

So, let's talk about how they take this winning formula, in an opportune moment, to make themselves even more profitable.👇

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