PositiveID Corp (OTCMKTS:PSID) Is A Dramatically Undervalued Buyout Target

We've spent a fair amount of time looking at diagnostics company PositiveID Corp (OTCMKTS:PSID) over the past couple of quarters, and we maintain that, at its current price, the company could be one of the most undervalued stocks on the OTC. Earlier this month, the company put out a white paper detailing proof of concept for its lead infectious disease device, and its market capitalization jumped on the back of the release. Since then, we've had an earnings update, and a market opportunities report. There's an element of this report that we're going to touch on in a little more detail shortly, but before we get to that, let's address the numbers.The company put out its financial results for the three and nine months ended September 30, 2016 on November 18. The filing's available at EDGAR here, but here are the highlights. Revenue for the nine period came in at $4.6 million, compared to revenue of $2.7 million for the same period a year earlier. This revenue increase came on the back of an acquisition that closed at the end of 2015, and one that is set to provide a steady (and growing) stream for the company for the foreseeable future – its ENG labs division. Basically, it's a lab on wheels, and the company constructs and hires them out/sells them to customers (government entities, mobile healthcare facilities, etc.)So, ENG is the main revenue driver right now, but this isn’t going to be the case for long. The company has developed what it calls Firefly DX. The system is a device that allows for rapid testing of a whole range of different pathogens, and holds a number of advantages over the currently available systems. Specifically, it's far faster, handheld (so very mobile) and it has been built to accept testing samples that are not proprietary to the system, meaning the company doesn’t have to get its own tests approved before its handheld device can be used to test for certain pathogens. Of course, getting clients to use its own tests is an important part of the model, but the approvals take time, so the ability to accept generic versions is a bonus while it pushes its own through the regulatory system.So, that said, we've got something else that we think represents the undervaluation of the company right now, and it's rooted in the potential for buyout.In the opportunities report we mentioned above, PositiveID noted a few comparable entities, some of which are a couple or a few years ahead of the company in a similar (although not directly, competing space.Take a look at these numbers:IQuum – sold in 2015 to Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) for $275 million up front and up to $175 million in milestone-based payments. The system developed by the company is an analyzer with two FDA approved tests for Influenza A/B and Strep A.BioFire Diagnostics – sold in September 2013 to French biotech firm BioMerieux for $450M. This is a company with a number of US government contracts, based on – again – an analyzer with two approved tests.GenturaDx – sold in 2012 to Luminex Corporation (NASDAQ:LMNX). $50M upfront plus $68M contingent consideration. At the time of the sale, the company was pre-revenue with a small number of prototype systems hmanufactured and undergoing internal testing and redesign. PositiveID believes that within 12 months the Firefly Dx will be at the same level of maturity as the GenturaDx system when acquired.These are just three deals in which companies with stark similarities to PositiveID were acquired for tens or hundreds of millions of dollars.At last count, PositiveID traded for just $366K.Yes, it's got some debt, and yes, its cash position isn’t that great. It's got a great product though, and that's what the big names are going to be looking at when they consider a bid, not the $13 million in liabilities.We will be updating our subscribers as soon as we know more. For the latest updates on PSID, sign up below!Disclosure: We have no position in PSID and have not been compensated for this article.