My case for buying Source Bioscience (SBS)

Thursday, 11th June 2015 16:01 - by ThePlunger

Source Bioscience (SBS) posted their annual results for 2014 on March 25^th. These showed an increase in turnover of 29%, operating profit was up 85% EBITDA up by 54%. In the year 2013 they made an operating loss due to the successful takeover of two smaller subsidiaries and the cost of establishing operations in the US.

SBS is a healthcare, life science and bio storage company based in Nottingham United Kingdom with laboratories in England, Scotland, Ireland, Europe and the United States. The latter of which has recently been opened.  It is one of only a very few companies with laboratories for DNA Sequencing in Europe this is done through the Life Science division. The healthcare division carry’s out Diagnostic Services. For detailed information check out their excellent website at:

http://www.sourcebioscience.com/

The share price at the time of writing is 13p giving a market capitalisation of £40.23 million.  I believe that over a medium term time frame of three to five years the company could conservatively be valued at around £200 million with a share price of 60p to 70p. This a conservative estimate when compared with their US listed counterparts.  

Given the strength of their efforts in the US it’s not inconceivable that SBS could be a good candidate to be taken over and there is considerable institutional interest and holding in it.

 Disclaimer.

I am long SBS, the views expressed are my own and not a recommendation to buy. Any would be investor should do their own Due Diligence and where appropriate seek qualified professional advice.