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Pin to quick picksInspiration Hlt Share News (IHC)

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Sunday share tips: Inspiration Healthcare, BP Marsh

Sun, 18th Jun 2023 14:51

(Sharecast News) - Neonatal medical machine manufacturer Inspiration Healthcare shares had been on the slide since late 2021 amid distribution issues in China.

The company had seen strong demand for its ventilators during Covid, but had that led to an overvaluation or was the medtech distributor now a bargain?

According to The Sunday Times's Lucy Tobin, it was the latter.

The market for neonatal intensive care was worth $6.8bn and expected to reach $10bn by 2027 due to growing demand, she pointed out.

Yes, results for the year to February had been less than inspiring, with underlying earnings down from £6m to £4m.

But the company had invested in new manufacturing capacity, had high-quality clients and revenues accelerated in the first two months of its 2024 year to nearly £2m.

Furthermore, its policy of reinvesting 9% of revenues into research and development should gradually pay off, Tobin judged.

"The price to earnings ratio is 9.6 for 2023, down from over 12 last year," she added.

"Inspiration is a dicey investment, but its medical technology's time has come: buy."

The Financial Mail on Sunday's Midas column tipped shares of BP Marsh to readers, highlighting the commpany's track record.

At the current price, the shares had "real potential", Midas believed.

BP Marsh was an investor in up and coming insurers, led by a well-respected industry veteran, Brian Marsch.

The firm typically invested up to £5m in exchange for stakes of between 20-40%, holding onto them for seven and a half years on average.

Just in the past six years, it had invested £27m upfront and made over £93m from their sale.

One of its investments will soon be acquired with BP Marsh looking to distribute £1m via a special divi or 2.78p per share.

That was on top of the regular payout of an identical amount.

It was also planning to spend £6m in share buybacks over three years, equating to an annual dividend of at least 5.56p.

The latest deal would leave the company with "plenty" of cash on its books and it was looking to grow its portfolio.

Should it do so wisely, that should lead to bigger profits and dividends as well as a rising share price.

"The firm has a track record of making money and there is every reason to believe it should continue doing so. Marsh and his team are extremely choosy about which businesses they support, they have decades of experience and the market is buoyant.

"[...] At £3.76, the stock is a buy."

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