Finncap say Buy with 19p target1 Aug 2016 13:26
FYI here's some extracts from Finncap's recent post-results note.
This is based on historic 1.7p EPS and 1.8p EPS this year, plus £1.4m net cash rising to £2.5m at April'17:
Extracts:
"The company is pursuing a buy and build model within the scientific instrument and technology space, designing, manufacturing and selling products to the life science, healthcare consumer and astronomy segments of the market, built around its digital imaging technology. Full year results showed encouraging progress; underlying growth in its core business supplemented by a half year’s contribution from Sentek. We are introducing 2018 forecasts as well as making minor changes to our 2017 forecasts. Our target price of 19p represents a 65% upside to the current level, at which point the stock would trade on a FY 2017 P/E of 11x and EV/EBITDA of 5x, moving more into line with its larger and more established peer group."
" Outlook.
A full year's contribution from the Sentek acquisition will drive the FY 2017 financial performance. Beyond this we expect the company to make additional acquisitions which are expected to positively impact the financial outlook. The recent guideline changes published by the Department of Health, pertaining to the decontamination of surgical instruments has positive long term implications for ProReveal but it is too early to include meaningful contributions into both 2017 and 2018.
Valuation.
The stock is currently trading on a FY 2017 P/E of 6.5x falling to 6.0x and an EV/EBITDA of 3.0x dropping to 2.8x, respectively. We are introducing a target price of 19p which is based on comparative multiple analysis. At 19p the share would trade on a FY 2017 EV/EBITDA of 5x and P/E of 11x, moving more closely into line with its peer group."
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