Don't take your eye off this one!7 Jun 2012 21:50
VERY NICE NOTE FROM DANIEL STEWART BACKING UP THE PROFITABLE GROWTH NOW AND INTO THE FUTURE
BTG again exceeded our expectations: FY12 PBT-DSC was £39.3m vs. £33.8m expected. Moreover, the group’s flagship product, Varisolve, is firmly on track for a US launch in 2014.
Investment Case
␣ Flagship product, Varisolve, on track for US launch in 2014.
␣ Licensing & Biotech division seeing strong growth in royalty income from Zytiga. Lemtrada and CytoFab in the pipeline.
␣ Smooth transfer to direct sales into the US market by Specialty Pharma Division.
Upside
from 417p to 429p
Buy 11%
What’s Changed (since 16/04/2012)
Company Description
International specialty pharmaceuticals company www.btgplc.com
Results exceeded expectations
BTG consistently exceeds expectations. As a result, the group’s share price continues to outperform the market.
Results
BTG’s final results for the year ended 31 March 2012 exceeded our expectations. Exceeding expectations Revenue increased by 77% to £197.0m (FY03/11: £111.4m), vs. £191.6m expected. Reported Profit before tax was £23.0m (FY03/11: loss of £10.8m), vs. £18.8m expected. PBT-DSC was £39.3m (FY03/11: £5.1m), vs. £33.8m expected. EPS-DSC
were 11.9p (FY03/11: 1.9p), vs. 10.2p expected. Cash and equivalents, together with cash on fixed term deposits was £111.9m at 31 March 2012 (£73.9m at 31 March 2011), vs. £99.4m expected.
Of note, the group generated £40.1m of Free Cash Flow over the period, vs. a £32.4m loss in FY03/11. We estimate that BTG will remain cash generative going forward.
Forecasts
As a result of BTG’s performance, we increased our FY03/13 forecasts to: Sales of £189.2m (previously £181.7m), PBT-DSC of £30.1m (£22.1m) and EPS-DSC of 9.1p (6.7p). We also issued FY03/14 forecasts: Sales of £201.0m, PBT-DSC of £38.2m, and EPS-DSC of 11.6p.
Outperformance continues
Since we initiated coverage of BTG in June 2010, the share price has increased by over 100%. Over the same period, benchmark indexes remained relatively flat (Chart 1). We believe that this impressive track record of outperformance clearly demonstrates management’s ability to create shareholder value. On the strength of BTG's product pipeline,
and given management's current business strategy, we are confident that the company’s share price will continue to outperform the market well into the future.