Cantor’s view14 Dec 2017 08:59
From August. Saw this while researching earnings potential. I think we could soon be back to recent director buying levels. 65p.
http://www.proactiveinvestors.co.uk/companies/news/182056/directa-plus-soars-as-cantor-fitzgerald-flags-valuation-anomaly-182056.html
The share price of graphene-plus company Directa Plus which has slipped sharply is now "profoundly" undervalued. Cantor Fitzgerald has upgraded Directa Plus Plc (LON:DCTA), saying the graphene-products supplier is “profoundly” undervalued at the current share price.
That share price was 32p or so when the broker note was written; it is now 38p after Cantor’s argument that the stock is bafflingly mispriced.
“The current valuation implies Directa is far behind its peers, despite being the only company in the space with established commercial sales and a proven scalable manufacturing process,” Cantor’s William Game said.
Game has moved his recommendation from ‘hold’ to ‘buy’ and has a punchy target price of 80p, though the price target does not look so punchy given the stock was trading in the seventies just three months ago.
In Cantor’s few, the lack of liquidity in the stock has been a factor in the share price slide since May from 74p to the low thirties.
The stock, prior to the broker note, was trading around three-fifths below its flotation price of 75p.
Looking at the ratio of enterprise value (essentially market capitalisation adjusted for debt or cash) to sales, the stock was also trading at a third of the value of its graphene peers and other similar early-stage tech companies, at 2.8.
“This is heavily unjustified given demonstrable growing momentum in the business,” the broker maintained.
Since floating in May of last year the Directa team has made excellent strides, developing customer relationships, expanding the portfolio of products using the company’s graphene-plus (G+) material, and delivering manufacturing improvements, Game notes.
Directa is engaging with six global textiles businesses that are intrigued by the unique performance enhancements offered by G+ products.
Cantor said it expects these engagements to start bearing fruit in the near term.
“Management also remains very confident about prospects within Environmental, alongside initial sales in Composites”, the Cantor analyst revealed.
“We expect positive announcements in the coming months, most likely within textiles and environmental, to provide catalysts for material share price upside,” Game concluded.
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