Creo Medical Company Research (CREO)

Creo Medical has released its FY24 trading update, summarising an eventful year for the company and its strategic priorities. The period saw Creo reaffirm its focus on its core technology platform and implement a majority stake divestment (51%) of its European consumable business (for net proceeds of c €30m), to help inject liquidity into the core business. Reported revenues in FY24 stayed broadly flat at £30.4m, and while core sales (excluding partnerships) grew c 74% y-o-y to £4m, the ramp-up was slower than management’s expectation. Consumables accounted for the remaining £26.4m, down marginally from £26.8m in FY23 (up 2.6% in constant currency), although cost controls enforced in H224 allowed for a c £5m reduction in opex. Given the sale and other modalities, timeline for operating profitability is now guided to be 2028 (previously 2025) and we expect the proceeds from the partial divestment and the £12.1m equity raise in October to provide a runway into 2027. Adjusting for these developments, our valuation resets to £408m or 99p/share (from £506m or 140p).